Life Cycle Cost Calculator
Answers the Question
What is the total cost I'm going to have to pay for this item?
Calculator for Life Cycle Cost
What Is the Life Cycle Cost?
A product's cost often entails a lot more than just its acquisition price. This formula attempts to provide a single mathematical figure which includes many details that are normally forgotten.
Why Is it Important?
- Many products have cost structures that are vastly different than they appear. Some products that cost more to buy last longer or hold their value better. Being able to compare products on an apples-to-apples basis allows .
Formula(s) to Calculate Life Cycle Cost
- LIFE CYCLE COST = INITIAL COST + PRESENT VALUE OF RECURRING COSTS - PRESENT VALUE OF RESIDUAL VALUE
- Not including hidden costs, such as transportation, installation, training, maintenance, and disposal costs.
- Not considering capital availability. It may make sense to purchase items with higher life cycle costs if they require less of an upfront investment.