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Home→The Westburn Dictionary of Marketing→O→opportunity cost

opportunity cost

Definition:
The cost in terms of lost income or profit of the foregone alternative investment or course of action. Where management fails to take an opportunity or make a decision to commit funds in an alternative way that would have produced a better net return, the lost revenue is an opportunity cost. For example, the opportunity cost of a marginal product allowed to linger in the product-line is the profit contribution that a new product could produce if the effort and resources being devoted to the existing product were redirected to the new one.

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© Westburn Publishers Ltd 2002, The Westburn Dictionary of Marketing edited by Michael J Baker, ISBN 978-0-946433-01-8. www.themarketingdictionary.com. Entry: [George Avlonitis], [1998].