Scale Effects Scale effects are easy to confuse with network effects because they both become stronger in relation to the number of users. Network effects cause products to become more valuable to users as the network grows, increasing defensibility by increasing product value. Scale effects, on the other hand, lead to lower per-unit production costs as the fixed costs of production are spread out among a greater number of units — meaning a higher profit margin which can increase defensibility against competitors with less favorable margins. Read more about Scale Effects 42