What is Cost-Benefit Analysis?
A definition of Cost-Benefit Analysis
“Cost-benefit analysis is a process used to evaluate the advantages and disadvantages of a decision by comparing its costs with its benefits.”

Business Glossary > What is Cost-Benefit Analysis?
Examples of Cost-Benefit Analysis in a Sentence:
The cost-benefit analysis showed that the project was economically viable.
We conducted a cost-benefit analysis to assess the merger’s potential.
Our cost-benefit analysis indicated a higher return on investment.
Why is Cost-Benefit Analysis Important in Business?
Performing a cost-benefit analysis helps businesses make informed decisions by quantifying costs and benefits, allowing them to weigh options and choose the most beneficial course of action. This method is essential for optimizing resource allocation and strategic planning.
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Associated Terms
Here are some associated business terms and synonyms for “Cost-Benefit Analysis”:
- Benefit-Cost Analysis
- Economic Assessment
- Cost-Effectiveness Analysis
Cost-Benefit Analysis at Amazon
Amazon conducts cost-benefit analyses to evaluate potential new service offerings. By comparing projected customer satisfaction improvements with anticipated operational expenses, Amazon ensures that new initiatives meet company objectives and support growth.
Final Notes on Cost-Benefit Analysis
When conducting a cost-benefit analysis, it’s important to consider:
- All potential costs and benefits, both direct and indirect
- The time frame over which costs and benefits will occur
- Possible risks and uncertainties
Thorough analysis leads to better decision-making and resource management.
This has been a definition of Cost-Benefit Analysis meaning.
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