When to use it
- The category has hidden or variable cost drivers.
- Baseline spend is incomplete.
- The team needs finance-ready questions before supplier comparison.
Cost drivers and TCO
Should-Cost and TCO Input Playbook
This playbook helps sourcing teams avoid comparing supplier options on visible price alone when service model, transition burden, logistics, support, or lifecycle costs may matter.
Version 1.1. Last reviewed July 11, 2026.
Overview
Separate cost-driver facts, assumptions, total-cost inputs, and sensitivity questions before comparison or negotiation.
This playbook helps sourcing teams avoid comparing supplier options on visible price alone when service model, transition burden, logistics, support, or lifecycle costs may matter.
Workbook example
Should-Cost & TCO Input Checklist in the starter kit.
Labor model, travel and dispatch, preventive maintenance, reactive repairs, materials markup, reporting, and switching friction.
Decision or review supported: Whether cost-driver assumptions are ready for finance review before shortlist approval.
When it is not sufficient
It is not a full financial model, audited cost analysis, tax review, or negotiation strategy. Finance and category specialists should validate assumptions before decisions rely on them.
Decisions supported
- Which cost drivers should be tested.
- Which assumptions need validation.
- Whether visible price is likely to misrepresent total cost.
Inputs required
- Spend exports
- Usage and demand data
- Service model assumptions
- Switching-cost estimates
- Supplier operating model signals
- Implementation requirements
Included artifacts
- Cost-driver worksheet
- TCO input checklist
- Assumption log
- Evidence status field
- Sensitivity question list
Example prompts and questions
- Which costs are known versus estimated?
- What changes if volume is wrong?
- What transition costs could offset savings?
- How does service model affect total cost?
Illustrative use case
Illustrative example: facilities maintenance costs may include labor rates, after-hours dispatch, travel premiums, preventive maintenance, materials markup, reporting administration, and site onboarding friction.
Common mistakes
- Using incomplete baseline spend.
- Ignoring switching friction.
- Treating vendor-provided estimates as verified facts.
- Comparing hourly rates without service model context.
Frequently asked questions
Is this a negotiation workbook?
No. It prepares cost-driver understanding before later pricing comparison or negotiation work.
Can it include formulas?
Yes, but the starter kit focuses on inputs and assumptions so teams can adapt it safely.
Related playbooks and examples
Next step
Use the starter kit, then request the full sourcing playbook overview.
The free kit shows the workflow. The full package discussion can cover team use, advisory use, category-specific adaptations, and implementation support.