Search costs or search costs are those costs incurred by the consumer when collecting useful information about the offer in order to identify the most suitable products or services to satisfy a need.
To be able to choose optimally, the consumer must look for information related to the characteristics of the goods and services, their prices, their possible substitutes, conditions of sale, availability, etc. In the process of gathering all this information the consumer incurs costs called search costs.
Search costs can become an impediment or barrier for consumers to switch to cheaper and more efficient products or providers. In this way, the search costs are included in the switching costs.
Examples of search costs
Search costs include: the time required to go to several stores, read information brochures of the characteristics of the products or speak with a salesperson to explain us, compare the characteristics of the products that are potential substitutes, negotiate the delivery conditions and / or payment, etc.
The effect of the internet on search costs
In general, consumers who make purchasing decision processes on the Internet incur lower search costs. Indeed, the Internet offers instant and most of the time free information that allows the consumer to evaluate products and prices. In addition, we can find price and feature comparison tools on the internet. These make it possible to browse and buy a large number of offers, efficiently.
Notwithstanding the foregoing, some internet users may face an information overload problem. Especially when they use directories and conventional search engines. Well, these give them thousands of data and documents related to the keywords they have used in the search. Analyzing all this information becomes too time consuming and expensive.
In this way, one way to reduce these costs would be to educate users about how to use the internet to make their searches more efficient. For example, through product comparison sites, consumer organizations or regulators.