Return (Customer) Cost

In the customer life-cycle cost of a product, used to develop product and service innovations, the cost an Intermediary Customer incurs to return defective or excess product to its supplier, including the cost to deliver the product to the supplier and receive credit for the returned product.
(See also Obtain Cost
, Sell Cost, Guarantee Cost)

Example 1:

Dell holds on to customers through what it calls "direct relationship marketing." In addition to cutting costs, the company's phone sales strategy gives it direct input from customers – an important edge over competitors, who rely on computer stores.
(Year 1991- SIC 3571)

Explanation: This innovation enables Dell to understand the end-user's problems with its computers more quickly and completely than do its competitors.

Example 2:

Lithium batteries can hold their power for 8-10 years, unused.
(Year 1987-SIC 3692)

Explanation: This innovation allows the product to stay on the shelf ready to be used for much longer time than other products. This allows the Lithium battery to be available for use, even in distant locations, without a lot of cost.

Example 3:

While other publishers often take back as many as 40% of the books they ship, at Dover all sales are final.
(Year 1991-SIC 2731)

Explanation: This innovation actually raises customer costs. But Dover more than makes up for this cost in its low price. The low price derives, in part, from the cost savings Dover realizes by not accepting returns.