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Procurement decisions made on purchase price miss the operating, support, and end-of-life costs that often dwarf the upfront difference. A Total Cost of Ownership Modeling Playbook reads full lifecycle cost components per option, models the projected TCO over the asset or contract life, and surfaces the option that wins on real economics.
The Challenge
Procurement performance is often measured on unit-price savings against incumbent or baseline. The downstream operating, support, and end-of-life costs that the procurement decision drives are owned by other functions and rarely flow back into the decision.
Maintenance cost lives in operations. Support cost lives in customer success. Energy or consumable cost lives in facilities. Without a TCO Playbook that synthesizes these data sources per option, the lifecycle cost picture cannot be assembled in time for the procurement decision.
Decommissioning, disposal, and replacement costs at end of life can be material but rarely appear in procurement scoring. The cheapest acquisition often produces the most expensive end-of-life, and the cycle repeats without learning.
How eyko Solves It
A Total Cost of Ownership Modeling Playbook reads purchase price, expected operating cost, maintenance cost, support cost, energy or consumable cost, end-of-life cost, and projected useful life per option. It produces a TCO projection per option across the relevant life window, decomposes the cost into contributing components, and recommends the option that wins on full economics rather than unit price alone.
The Playbook modeled TCO across 24 active procurement decisions affecting $42M in lifecycle spend. 12 decisions show the lowest-purchase-price option does not win on TCO. The aggregate TCO gap between purchase-price-winners and TCO-winners is $8.4M across the modeled decisions. The largest single TCO gap is on a maintenance-heavy category where the cheaper option carries 2.4x the operating cost over the asset life.
| Metric | Current | Benchmark | Status |
|---|---|---|---|
| Primary indicator | Flagged | Target | Action needed |
| Secondary indicator | Monitoring | Within range | On track |
| Trend direction | Declining | Stable | Review required |
Total Cost of Ownership Modeling produces a TCO projection per procurement option across the relevant life window using purchase, operating, maintenance, support, energy, and end-of-life cost components. The Playbook decomposes the cost picture, recommends the option that wins on full economics, and surfaces where the lowest-purchase-price option loses to a more expensive option on TCO so decisions get made on real economics rather than unit price.
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FAQ
Everything you need to know about TCO Decision Map.
Total Cost of Ownership Modeling is an AI-driven projection of TCO per procurement option across the relevant life window using purchase, operating, maintenance, support, energy, and end-of-life cost components. The Playbook decomposes the cost picture, recommends the option that wins on full economics, and surfaces where the lowest-purchase-price option loses to a more expensive option on TCO so decisions get made on real economics rather than unit price.
The Playbook reads from your ERP and procurement system (purchase price, contract terms), operations system (maintenance and operating cost history), customer success or support tool (support cost per option), facilities or energy management (utility cost benchmarks), and product lifecycle data (useful life, end-of-life cost benchmarks). At least 18 months of paired cost-and-option data anchors the modeling in real benchmarks.
Standard procurement scorecards anchor on unit-price savings against baseline. TCO Modeling extends the scoring across the asset or contract life and includes the downstream costs the procurement decision drives in other functions. The two are complementary, but TCO is what catches the cheap-acquisition-expensive-operation trap that unit-price metrics miss.
Yes. The Playbook recommends a TCO scoring requirement above a configurable threshold (typically larger procurement decisions where the lifecycle cost dominates the unit price). It also recommends post-purchase TCO capture so actual outcomes feed back into future modeling, tightening the projection accuracy over time and building organizational discipline around full-economics decisions.
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