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An experience good is a product or service that is difficult to evaluate in advance in areas such as price and quality. If you sell an experience good, reputation, customer loyalty and word of mouth is extremely valuable as these are the primary things that customers can use to make purchasing decisions. The following are illustrative examples of an experience good.
HaircutIt is difficult to tell how a haircut will work out until it's done. A customer who has a positive experience is likely to return.MedicineA patient may have little idea about the talent, equipment, philosophical and process differences from one hospital to the next. In a country where medical treatment isn't free for residents, the price may also be a mystery.RestaurantsHistorically, restaurants were often used by economists as prime examples of an experience good. However, the number of restaurant reviews and ratings now available in digital formats has removed much of the uncertainty.
TravelTravel experiences such as an day tour are often difficult to evaluate upfront. Legal ServicesThe total cost of legal services and performance of lawyers.AdviceProfession advice such as investing recommendations are often best evaluated based on actual results.Information ProductsInformation products such as a self-improvement book.NotesExperience goods relate to economics and the information consumers use to make decisions. It should not be confused with the experience economy.Experience goods are similar to credence goods. The difference is that credence goods are difficult to evaluate even after the service has been fully delivered. For example, vitamins that are supposed to make you generally more healthy.|
| Type | | | Definition | A product or service that is difficult to evaluate in advance of purchase. | | Related Concepts | |
Goods
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