Search Cost

Definition of 'Search Cost'


The time, energy and money expended by a consumer who is researching a product or service for purchase. Search costs include the opportunity cost of the time and energy spent on searching - time and energy that could have been devoted to other activities - and perhaps the money spent to travel between stores examining different options, purchase research data or consult an expert for purchasing advice.

Investopedia explains 'Search Cost'


Search costs tend to be higher on big-ticket items because it makes more sense to spend time, energy and possibly money researching how to get the most reliable and affordable car than it does researching how to get the tastiest and most affordable sandwich. The consequences of making a bad purchase decision on an expensive item are much greater than those for an inexpensive item.

Thanks to the internet, buyers face lower search costs for almost anything they want to buy today than they did two decades ago, because users can now get fast, accurate information on products and services without even having to leave home.


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