Print on demand with digital technology is used as a way of printing items for a fixed cost per copy, irrespective of the size of the order. While the unit price of each physical copy printed is higher than with  offset printing, the average cost is lower for very small print runs, because setup costs are much higher for offset printing.

POD printer services usually make use of digital storage to retain works ready for printing single copies at very short notice, as the sales order comes in. Each copy of a POD book is more expensive to produce than a commercially published and printed book, where the volume of printing brings the per-copy cost down.

The flip side for commercial publishers is that they take a financial risk by pre-printing thousands of copies of a book and then storing them, waiting for sales. Additionally, commercial publishers offer bookstores a return policy if the book doesn't sell, absorbing that risk as well.
POD has little to no initial financial risk for the publisher, other than whatever set up fees the POD printer charges. Since some POD printers prefer to take commissions on sales of books rather than charging up front fees, an author can have their book printed for almost no cost

POD has other business benefits besides lower costs (for small runs):
Technical set-up is usually quicker than for offset printing.
Large inventories of a book or print material do not need to be kept in stock, reducing storage, handling costs, and inventory accounting costs
There is little or no waste from unsold products.
These advantages reduce the risks associated with publishing books and prints and can lead to increased choice for consumers. However, the reduced risks for the publisher can also mean that quality control is less rigorous than usual.