How To Invest
What is Wright's Law?
Pioneered by Theodore Wright in 1936, Wright’s Law aims to provide a reliable framework for forecasting cost declines as a function of cumulative production. Specifically, it states that for every cumulative doubling of units produced, costs will fall by a constant percentage.
Y = cumulative average time (or cost) per unit
X = cumulative number of units produced
a = time (or cost) required to produce 1st unit
b = slope of the function