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HoldingCost

Lifecycle of ownership calculator

Everything has a holding cost — even your pet. Model the lifetime cost of everyday ownership, including replacement cycles and inflation on running costs.

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Logic updated April 2026

This calculator models the long-term cost of everyday ownership including replacement cycles — perfect for assets you'll buy multiple times over a planning horizon (phones, laptops, tyres, appliances). It accumulates running cost (inflated annually) and treats each replacement-cycle year as a fresh purchase, surfacing a true total cost of ownership over the full lifespan.

How this is calculated

Formula 

yearTotal(t) = (annualCosts × (1 + inflation/100)^(t-1)) + (purchasePrice if t is a replacement year, else 0)

Step-by-step

  1. Buy the first asset at year 1 (purchase price as upfront cost)
  2. Each year, accumulate running costs inflated by the cost-inflation rate compounded from year 1
  3. Determine replacement years from the replacement cycle period and number of replacements
  4. On each replacement year, add another purchase-price expense (held constant in nominal terms — no item-price inflation)
  5. Sum across all years for total lifetime cost
  6. Express as cost per year and cost per day for budgeting comparisons
Rounding mode
ROUND_HALF_UP
Precision
20-digit internal precision (Decimal.js), rounded to 2 decimal places for display
Logic last reviewed

Assumptions & limitations

What this calculator assumes

  • Annual running costs grow at a constant inflation rate
  • Replacements are modelled at the start of each replacement-cycle year
  • Replacement purchase price is held constant in nominal terms (no item-price inflation)
  • Daily cost uses the Gregorian average of 365.2425 days per year

What this calculator doesn’t account for

  • Doesn't model item-price inflation — replacements assumed at original price
  • Doesn't include trade-in or resale value at replacement
  • Doesn't factor in technology improvements that may shift cost or replacement frequency
  • Doesn't account for variable replacement timing — assumes a fixed cycle
  • Doesn't include disposal or end-of-life costs

Worked example

A pet owner projects 12 years of dog ownership: $2,000 upfront cost, $1,800/year of running cost, 5% annual cost inflation, no replacement (single asset).

Input Value
Purchase price $2,000
Annual running cost (year 1) $1,800
Cost inflation 5%/year
Replacement cycle 0 (no replacement)
Lifespan 12 years

Total lifecycle cost: ~$30,650 — Annual cost: ~$2,554 — Daily cost: ~$7

Year 1: $2,000 + $1,800 = $3,800. Year 2: $1,800 × 1.05 = $1,890. Year 3: $1,985. ... Year 12: $1,800 × 1.05^11 = $3,078. Total running costs over 12 years (compound inflation): ~$28,650. Total = $2,000 + $28,650 = $30,650. Effective $7/day or $2,554/year. The headline 'pet costs $1,800/year' undercounts true lifetime cost by 30–40% once inflation is properly modelled.

Frequently asked questions

What is lifecycle cost analysis?

A planning method that totals all costs across an asset or category's full lifespan, including replacements within that lifespan. It reveals the true cost of ownership for assets you replace regularly — phones every 3 years, laptops every 5 years, vehicles every 8 years — by treating the whole sequence as one long-term cost stream rather than a series of one-off purchases.

How do I compare products with different lifespans?

Use the same total horizon for both, with the right number of replacements built into the cycle. Compare a laptop expected to last 5 years (2 replacements over 10 years) against one expected to last 8 years (1 replacement over 10 years). Lifecycle cost normalises across lifespans — the longer-lasting product often wins despite a higher upfront price.

What costs should I include?

Purchase price (and any setup or installation), recurring running costs (consumables, services, subscriptions tied to the asset), maintenance and repair (especially as the asset ages), and any disposal cost at end-of-life. The calculator handles purchase + running + replacement; bake other costs into the running-cost line if they're recurring or into the purchase price if they're upfront.

How does disposal cost factor in?

This calculator doesn't model disposal explicitly. If disposal is meaningful (e.g., asbestos removal, hazardous waste, large appliance removal), add it to the running cost in the final ownership year, or subtract it from the resale figure if you're using lifetime cost calculator instead. For most consumer goods, disposal is small enough to ignore.

Why does cost inflation matter so much?

Because long horizons compound dramatically. At 5% cost inflation over 12 years, year 12's running cost is 75% higher than year 1's. Total compounded running cost is about 50% higher than (year 1 cost × years) would suggest. Skipping inflation makes lifecycle cost analysis significantly understate true cost — typically by 20–40% over decade-plus horizons.

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