Procurement tools
Total cost of ownership calculator
Unit price is only the opening bid. Add logistics, quality failures and carrying cost, and see what a supplier actually costs you per unit.
Formula
TCO per Unit = Unit Price + Logistics + Quality Cost + Carrying Cost
Order basics
Unit price
Quoted price per unit from the supplier
₹
Order quantity
Units per order or per year, for total figures
Logistics
Freight cost per unit
Inbound shipping, allocated per unit
₹
Duties & customs
As a % of unit price
%
Quality
Defect rate
Share of units that fail or need rework
%
Cost per defect
Rework, scrap, returns or downtime per failed unit
₹
Carrying cost
Annual carrying rate
Capital, storage, insurance & obsolescence, per year
%
Average months in inventory
Time between receipt and use/sale
TCO per unit
₹0
vs. quoted price–
Total order TCO–
Hidden cost / unit
Cost stack per unit
Defect cost is spread across all units in the order, not just the defective ones — that’s the real cost a low quality rate quietly adds to every unit you buy. Carrying cost is prorated for however long the item actually sits in inventory before use, so a supplier with a longer lead time or larger minimum order quantity can carry a higher hidden cost even at an identical unit price.
Frequently asked questions
What is total cost of ownership in procurement?
The full cost of acquiring and using an item over its life, not just its purchase price — adding logistics, quality failure costs and carrying costs so suppliers can be compared fairly.
Why is the lowest unit price not always the lowest TCO?
A cheaper unit price can hide higher freight, more defects and rework, or slower delivery that forces more safety stock. Once added in, a higher-priced supplier can end up cheaper overall.
How is carrying cost calculated?
Usually a percentage of unit price per year covering capital, storage, insurance and obsolescence, prorated for how long the unit sits in inventory before use.
Is this TCO calculator free to use?
Yes. It runs entirely in your browser, needs no account, and nothing you enter is stored or transmitted.