Search Cost

AAA

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.

RELATED TERMS
  1. Consumer Reports

    An evaluation of a new product, or a comparison between products, ...
  2. Consumer Goods

    Products that are purchased for consumption by the average consumer. ...
  3. Consumer Spending

    The amount of money spent by households in an economy. The spending ...
  4. Consumer Staples

    Essential products such as food, beverages, tobacco and household ...
  5. Michigan Consumer Sentiment Index ...

    A survey of consumer confidence conducted by the University of ...
  6. Consumer Confidence Index - CCI

    A survey by the Conference Board that measures how optimistic ...
Related Articles
  1. Budgeting

    5 Ways To Control Emotional Spending

    Follow these five simple steps to keep your spending under control.
  2. Budgeting

    Layaway Plans: Get The Goods Without Going Into Debt

    If using a layaway plan keeps you from having to use your credit card, it could be a smart move.
  3. Budgeting

    Lose 10 Pounds Of Overspending

    Bad spending habits are not always obvious. What could you be doing to ensure that your money's going where it should?
  4. Options & Futures

    5 Money-Saving Shopping Tips

    Reducing the amount you spend is the easiest way to make your money grow.
  5. Options & Futures

    Shopping Online: Convenience, Bargains And A Few Scams

    Shopping from the comfort of your couch has major benefits - and some unpleasant side effects.
  6. Budgeting

    Coupon Shopping: Clip Your Way To Savings

    Use coupons strategically to score big savings on everyday purchases.
  7. Personal Finance

    12 Ways To Shop Smarter

    The early bird may catch the worm, but in shopping, the worm will come to those who wait.
  8. Economics

    What's Demand Elasticity?

    Demand elasticity is the measure of how demand changes as other factors change. Demand elasticity is often referred to as price elasticity of demand because price is most often the factor used ...
  9. Budgeting

    4 Secrets You Should Know When Buying Groceries

    With a little foresight, every consumer can find ways to eat healthier without spending much money.
  10. Savings

    This Mysterious Job Saves You Money On Groceries

    Mystery shoppers visit various establishments. Discover how their efforts will save you money in the long run.

You May Also Like

Hot Definitions
  1. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  2. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  3. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  4. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  5. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
Trading Center