comparedcost

Comparedcost is a metric used in decision analysis to express how two options differ in cost. It indicates whether one option is more or less expensive, and by how much, relative to a chosen reference. In practice, comparedcost can be reported as an absolute difference in currency or as a relative percentage.

For two options with costs cA and cB, the absolute comparedcost is cA − cB. The relative comparedcost is (cA − cB) / cB, typically expressed as a percentage. Different fields may choose different reference bases, such as the cheaper option or the baseline plan; it is important to state the convention clearly.

Comparedcost is used in supplier selection, budgeting, and project evaluation to contrast alternative solutions. In procurement, it helps decide between vendors by quantifying how much more a preferred vendor costs. In software or hardware planning, it informs build vs buy decisions. In cost-benefit analysis, it complements qualitative judgments by providing a numeric cost delta.

Limitations include that comparedcost does not account for non-monetary value, total cost of ownership, timing of payments, or risk. The measure depends on the chosen reference, currency, and time horizon; comparisons should be normalized to the same scope and date.

See also: cost difference, cost ratio, total cost of ownership, cost-benefit analysis, economic evaluation.