In business, consumer surplus is the difference between the price customers are willing to pay and the price they are currently paying for a product or a service.
Theoretically, a low consumer surplus is not a good thing. Consumers love to get the most out of their money. If they spend $20 they want to feel like they are getting $50 worth of stuff or service. So when that number is low, it means they are almost at the point where they think their price they pay is not worth the product or service.
There are many factors, it can be from the product or service going stale over time. If new competitors have risen, they may begin to value yours less thus lowering consumer surplus. There are many different possibilities.
Ensure your customers are getting a quality product that does what it is advertised to do and efficiently at that. Pricing the product reasonably can help as well.
Create Date: September 13, 2024
Last Modified Date: September 13, 2024
