Balanced Value Impact Model

Consumer surplus

When there is a difference between the price that a stakeholder pays in the market and the value that they place on the product/service, then the concept of consumer surplus becomes a useful one to investigate. Consumer surplus is an economic measure of the welfare that people gain from consuming goods and services above a purely financial rate as set by the market.
The definition of consumer surplus is the difference between the total amount that stakeholders are willing and able to pay for a product, good or service and the total amount that they do pay (i.e. the market price). This is the value that consumers place on accessing resources over and above any costs that may be incurred to obtain them.

In simple terms, if you would be willing to pay £1.60 for a cup of tea but can buy it for £0.90 – the consumer surplus for that person is £0.70. For example, a study might show that for every $1 of public money spent, users received more than $4 of direct benefit in consumer surplus terms.

See Case study 3.5: The value of the British Library in Delivering Impact with Digital Resources.

See also: Tessler, A. (2013) Economic Valuation of the British Library. Available at: https://www.oxfordeconomics.com/my-oxford/projects/245662

This page has paths: