A lifetime cost is a term used to describe the collective expenses associated with the acquisition and ongoing use of a good or service for the entire usable life of that product. This will include not only the original purchase price, but also any related taxes, fees, and charges involved in the ownership, as well as any costs associated with repairs or maintenance. Projecting the lifetime cost of a given product is very important for both individuals and businesses, since that total cost will make a difference when it comes to maintaining a balanced budget and actually getting enough benefit from the product to justify the expense.
The concept of lifetime cost is relevant to a number of purchases and acquisitions, even ones that are at the onset relatively inexpensive. A simple example involves the purchase of a blood glucose meter that can be used to monitor blood sugar levels. It is not unusual for manufacturers to offer the meters at very affordable prices, making them appear to be a good deal. On the back end of the purchase is the need to continue purchasing test strips that are designed for use with that particular meter. Depending on the make and model of the meter, the strips may be extremely expensive.
This means that before the consumer purchases that glucose meter that is available for such a low price, looking into the lifetime cost of owning and using the meter is crucial. What he or she may find is that while the initial purchase price is low, the cost of buying strips to use with the meter is prohibitive and results in a significant expense. By comparison, purchasing a meter that is a little more expensive on the front end but uses test strips that are roughly half the cost of the strips used by the less expensive meter will likely result in a lower lifetime cost, something that will make a positive impact on household expenses.
Projecting the lifetime cost becomes even more critical when considering a major purchase, such as a piece of real estate or even an automobile. Taking the time to consider expenses other than the purchase price, such as taxes, insurance, cost of upkeep and maintenance and even replacement of components that suddenly fail should all be evaluated closely before making a purchase. Doing so will save money in the long run, and possibly allow the buyer to achieve a level of satisfaction that would not have been possible under other circumstances.
