diminishing returns

[dih-min-ish-ing ri-turnz]

noun

1. any rate of profit, production, benefits, etc., that beyond a certain point fails to increase proportionately with added investment, effort, or skill.

2. Also called law of diminishing returns. Economics.,  the fact, often stated as a law or principle, that when any factor of production, as labor, is increased while other factors, as capital and land, are held constant in amount, the output per unit of the variable factor will eventually diminish.

diminishing returns

plural noun

1. progressively smaller rises in output resulting from the increased application of a variable input, such as labour, to a fixed quantity, as of capital or land

2. the increase in the average cost of production that may arise beyond a certain point as a result of increasing the overall scale of production

Word History and Origins

Origin of diminishing returns¹

First recorded in 1805–15

Example Sentences

This well-known phenomenon is referred to as the "law of diminishing returns."

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They pledged to “notably” raise the share of household consumption in the economy, a promise that analysts say is to hedge against a global backlash aimed at a flood of cheap Chinese exports and to make up for diminishing returns from domestic investments.

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“You have diminishing returns on the end of the spectrum,” he said.

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On Pinterest’s Tuesday earnings call, the company shared that it anticipates its cost of goods sold to accelerate from the end of 2025 into 2026, in part due to “diminishing returns” from the infrastructure cost optimization initiatives that Pinterest has undertaken for the last two-plus years.

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Instead of the superexponential improvements Altman predicted, there have been sharply diminishing returns.

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