In economics, consumer surplus is the extra value a buyer receives when paying less than their maximum willingness to pay.
If a person would pay $20 for a product but buys it for $12, the consumer surplus for that transaction is $8. Across many buyers, economists add these differences to estimate the benefit consumers receive from market exchange. On a standard demand-and-supply diagram, consumer surplus is the area below the demand curve and above the market price, up to the quantity purchased.
Consumer surplus is not the same as income or cash profit. It is a measure of perceived benefit, and it can be estimated from observed choices or demand curves. A price reduction generally increases consumer surplus, although the distribution of those gains depends on which buyers change their purchases.
Producer surplus measures the corresponding gains on the seller side, while total surplus combines both sides before accounting for wider external effects.