Cost-effective definition

What is Cost-Effective?

A transaction is cost-effective when the greatest benefit is gained for a comparatively low price. The concept is commonly employed when choosing from a variety of investment options, so that the greatest possible return is generated in exchange for the amount invested.

Example of Cost-Effective

The addition of a product feature to a product design is cost-effective if the result is an increase in sales that exceeds the cost of the feature. Or, a modest investment in a bottleneck production activity is warranted if doing so allows a business to increase the amount of throughput generated.