Vendor Total Cost of Ownership
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Calculate the total cost of ownership for a vendor contract including setup, annual fees, and switching costs over an uncertain duration.
NOTEAbout This Model
## Calculate the total cost of ownership for a vendor contract including setup, annual fees, and switching costs over an uncertain duration. This model estimates **Total Cost Of Ownership** based on uncertain inputs: Initial Contract Cost, Ongoing Contract Cost Per Year, Switching Cost, Contract Duration Years. Run the simulation to see the distribution of possible outcomes.
VARIABLEOngoing Contract Cost Per Year
triangular(5000, 1.3e+4, 2.0e+4)
Annual maintenance and subscription fees.
ongoing_contract_cost_per_year
VARIABLEContract Duration Years
lognormal(1.0459, 0.3246)
The expected length of the relationship.
contract_duration_years
VARIABLEInitial Contract Cost
triangular(1.0e+4, 3.0e+4, 5.0e+4)
Initial implementation and licensing fees.
initial_contract_cost
VARIABLESwitching Cost
triangular(2000, 6000, 1.0e+4)
Costs to migrate data and train staff away from previous vendor.
switching_cost
FORMULATotal Ongoing Costs
ongoing_contract_cost_per_year * contract_duration_years
Total ongoing costs over the full contract duration.
total_ongoing_costs
FORMULATotal Cost Of Ownership
initial_contract_cost + total_ongoing_costs + switching_cost
Cumulative cost including initial setup, annual fees, and the penalty/cost of switching.
total_cost_of_ownership
OUTPUTTotal Cost Of Ownership
total_cost_of_ownership
Full lifecycle cost of the vendor relationship including purchase price, implementation, maintenance, and costs. Use to compare vendor quotes on an apples-to-apples basis.
What is Carlo?
Carlo is a visual tool for Monte Carlo simulation. Model uncertainty by dragging probability distributions, connecting them visually, and running thousands of scenarios instantly.