Lifecycle cost
Purchase price decides one year. Energy, labour, maintenance, spares and downtime decide the next ten to fifteen. Model both, discount them, and compare options on annual equivalent cost and cost per unit.
Last reviewed 2026-08-21. Pre-tax, pre-financing planning model.
Do not have an installed cost yet? Build it in the CapEx calculator.
Compare industrial assets on lifecycle cost — installed CAPEX plus escalated operating cost over the useful life, less residual value — instead of purchase price alone.
lifetime OPEX = year-1 OPEX x Sum((1+e)^(t-1)) for t = 1..life; lifetime TCO = CAPEX + lifetime OPEX + decommissioning - residual; PV TCO = CAPEX + Sum(year-1 OPEX x (1+e)^(t-1) / (1+d)^t) + (decommissioning - residual) / (1+d)^life; annual equivalent cost = PV TCO / annuity factor; cost per unit = lifetime TCO / (annual units x life).
This is a preliminary planning estimate. Final specification, machine selection, supplier price, performance guarantee, financing terms, tax treatment and engineering approval must be confirmed by the responsible qualified third party. Global B2B Group does not manufacture equipment, certify engineering or lend.
Carry the result into a structured RFQ: Useful life, Energy and utility assumptions, Maintenance and spares scope, Availability requirement, Cost per unit target. You review and approve every transferred value — nothing is submitted automatically.
Engine version 1.2.0 · reviewed 2026-08-21 · full methodology
TCO is the full lifecycle cost of an asset: installed capital cost plus every year of energy, operating labour, maintenance, spare parts, consumables, unplanned downtime, insurance and compliance, plus decommissioning, less residual value. On production equipment the operating cost across a ten-to-fifteen year life routinely exceeds the purchase price, which is why the cheapest quotation is often not the cheapest asset.
Take total project CapEx, add each annual operating cost line escalated over the useful life, add end-of-life decommissioning, subtract residual value. For a comparison between options with different lives, discount the operating stream at your cost of capital and convert the present value into an annual equivalent cost. Divide lifetime cost by lifetime saleable units to get cost per unit.
Two proposals with different useful lives and different energy consumption cannot be compared on price or even on lifetime cost. Annual equivalent cost converts each option into a single comparable yearly figure at your discount rate, which is the only fair basis when one machine costs more but runs longer or consumes less.
Estimate expected unplanned downtime hours per year and multiply by the contribution margin lost per hour, plus any recovery labour. It is a user estimate, not a measured availability figure. If a supplier states a guaranteed availability in the proposal, use that figure and reference it in the RFQ acceptance criteria.
No. It is a pre-tax, pre-financing model. Corporate tax, depreciation shields, local incentives, interest and currency risk are excluded and must be assessed by a qualified accountant or your financing provider. Global B2B Group is not a lender, broker or financial advisor.
Use the useful life your own accounting policy applies to the asset class, and keep it identical across every option you compare. Changing the horizon between options is the most common way a TCO comparison silently favours one supplier.
