Work out total cost of acquisition instantly with clear inputs, formula shown and shareable results.
Total cost of acquisition captures everything spent to get an asset into productive use: purchase price, landed logistics costs, installation and commissioning, and the internal cost of running the sourcing process. It routinely exceeds the quoted price by 20% or more.
Landed cost
Landed = Purchase price + Freight, duty and insurance
Total cost of acquisition
TCA = Landed cost + Installation and commissioning + Internal procurement cost
Acquisition covers only getting the asset in place. Ownership adds operating, maintenance, downtime and disposal costs over the whole life.
Because a complex sourcing exercise consumes real engineering and legal time. Ignoring it makes tendering look free and biases decisions towards over-tendering.