Cost Of Entry

The cost to enter an industry.

The "cost of entry" is the cost of setting up a business. This cost determines the level of competition in an industry.

Some businesses cost little to set up: for example, an eBay store. Because the cost of entry is low, there are many competitors.

Other businesses cost a lot to set up. For example, if you wanted to enter the automobile manufacturing industry you would need to spend many millions of dollars on plant, equipment and skilled labor. Industries with a high cost of entry typically have fewer competitors than those with a low cost of entry. Just because there are fewer competitors, however, doesn't mean competition is not fierce!

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License