Transaction costs are the costs associated with making commitments and enforcing them. They include the cost of the dialog and interaction between users and agents necessary for capacity to engage with demand, and the cost of ensuring fulfillment leads to enjoyment, if performance and affordance do not result in agreed outcomes. Transaction costs are higher when the experience is too painful, which makes the idea of capacity and meeting demand less attractive. Quality of experience and transaction costs are inversely related. When transaction costs are too high, then customers may seek alternatives to the service, including DIY options. Higher levels of goodwill and trust between customers and service providers, can lower the transaction costs.

Posted by:Majid Iqbal

TL;DR I bring clarity to the concept of a service.