BeCuriouzLearn something new every day
Why the 100th thing you build is cheaper than the 1st
💡 Costs tend to fall by a fixed percentage with every doubling of cumulative output — so experience, not just time or scale-of-the-moment, is what makes production cheap.
In 1936, aeronautical engineer Theodore Wright noticed something strange while studying airplane factories: every time the total number of aircraft ever built doubled, the labor cost to build the next one dropped by a remarkably consistent percentage — roughly 20%. Not because of a new machine or a good month, but simply because workers and processes had accumulated more experience. This became known as Wright's Law, or the experience curve.
The key word is cumulative. Cost falls with total lifetime output, not with calendar time or how fast you're running this week. A factory that has made 1 million units is structurally cheaper per unit than one that has made 100,000 — even if both stamp out the same amount today — because it has climbed higher up the curve.
This quietly explains some of the biggest price collapses in business history. The Ford Model T fell from about $850 in 1908 to under $300 by the 1920s as cumulative production soared. Solar panels and lithium-ion batteries have followed the same steady descent for decades — every doubling of the world's installed base knocks another chunk off the price. It's also why first-mover scale is so valuable: the company that races down the experience curve first can price at a level rivals literally cannot match yet.