Free decision tool
Equipment lifecycle
cost calculator
Compare two technically suitable options using a common period, annual costs and residual value. No sign-up required.
By Davit Tsitsko · Published 29 October 2026
How does this calculator compare equipment costs?
For each option, it adds purchase and installation cost to annual operating and maintenance cost multiplied by the study period, then subtracts residual value. It compares undiscounted costs in one currency. The lower total is a cost comparison, not an automatic purchasing recommendation.
Total = initial cost + (annual cost × years) − residual value.
The default fictional example gives Option A a five-year total of 205,000 and Option B a total of 190,000. B is lower by 15,000, before omitted costs and discounting.
Worked example: a higher purchase price with lower running costs
Option A: 80,000 initial cost + (25,000 annual cost × 5 years) = 205,000. Option B: 100,000 + (18,000 × 5) = 190,000. These are fictional inputs, not supplier quotes or client results.
B costs 20,000 more initially and 7,000 less per year. Simple payback is 20,000 ÷ 7,000 = 2.86 years. To recover the extra initial cost within five years, B needs an annual saving of 4,000, assuming equal residual values and no other differences.
Before using the result in a decision
- Confirm both options meet the same technical requirement and required output.
- Use one currency and the same treatment of tax, inflation and installation exclusions.
- Include energy, consumables and maintenance once; avoid double-counting bundled service costs.
- Repeat with downside assumptions for utilisation, energy prices and maintenance.
- Document service coverage, acceptance criteria and spare-parts access separately.
What does this tool leave out?
This screening model assumes constant annual costs and excludes discounting, financing, tax, changing energy prices, intermediate replacements and downtime. Entering those costs into an annual allowance does not model their actual timing. For an investment approval, use a cash-flow model with your finance and engineering teams. Simple payback ignores the time value of money and later cash flows.
Method and related resources
The US Department of Energy lifecycle-cost resources describe more complete analysis for buildings and building-related systems. This simplified industrial screening tool is Davit Tsitsko’s explanatory implementation; it is not the DOE model or an endorsement.
Read the equipment lifecycle-cost guide, use the vendor evaluation scorecard, or explore procurement advisory to connect the numbers to a supplier decision.