What Does "Cost Prohibitive" Mean?

By Staff WriterLast Updated May 27, 2020 7:22:48 PM ET
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You would love to have a Porsche 911 or a mansion. But if you earn an average salary, the cost of either item is probably way beyond your budget. You could say that the price of the Porsche 911 is cost prohibitive. The price is high enough that you are prohibited from buying it on your current salary.

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Definition of Prohibitive

The word "prohibitive" is an adjective with several definitions. One definition is something that is restricted or forbidden. For example, "the prohibitive rules of the homeowners' association kept her from walking across the grass."

A second definition of the word "prohibitive" is something that is too expensive, usually too expensive for the average person. Instead of saying "cost prohibitive" you could say "prohibitive when talking about prices."

Examples of Cost Prohibitive in Business

It's not only the person seeking the Porsche 911 who might find the cost prohibitive. Businesses also encounter prohibitive costs. For example, a company might hope to expand to a new market. But the cost of doing so might be so high that they are unable to grow.

Another example of cost prohibitive in business is if a company has already expanded. It might be a U.S.-based retailer that opened stores in Canada. But if the stores don't earn a profit, it's cost prohibitive for the company to remain in that market.

Examples of Cost Prohibitive in Government

The government might tax certain products in an attempt to make them cost prohibitive and reduce the use of those products. Because of the tax, the government usually benefits from continued use of the taxed products.

Some cities have started adding a tax on sugar-sweetened drinks, such as sodas. In some areas, the tax has made the purchase of soda and other sugary beverages prohibitive. For instance, NPR reports that the city of Berkeley, California, saw a more than 50 percent drop in soda consumption during the first three years of the tax. 

Examples of Cost Prohibitive in Private Life

Sports cars and mansions aside, some more essential items often prove to be cost prohibitive for the average person. One example is the cost of going to college or earning an advanced degree. Between 1978 and 2014, the cost of higher education increased 1,225 percent, according to Bloomberg.

The high price of college hasn't kept people from going to school, though. Instead, they are likely to take out student loans to pay for tuition. High loan amounts can make it challenging for students to save enough for future purchases. This can make buying a house or saving for retirement cost prohibitive as well.

Other Ways to Say Something Is Cost Prohibitive

There are simpler ways to say that something is beyond your budget. If you can't afford something and won't buy it for that reason, you can just say that it's too expensive for you. You could also say that the price of something is "too rich for your blood" or that you would prefer a cheaper option.