Purchase Cost Analysis (Pca) Definition

A purchase cost analysis (PCA) is a review of the total cost of ownership (TCO) for a given product or service. The purpose of a PCA is to identify opportunities to reduce TCO and improve the financial performance of an organization.

There are two types of purchase cost analyses:

1. Life cycle costing: This approach assesses all costs associated with acquiring, using, and disposing of a product or service over its entire life cycle.

2. Cost-per-use analysis: This approach focuses on the costs incurred for each use or unit of output produced by a product or service.

Organizations use purchase cost analyses to support decision making in a number of areas, including strategic sourcing, contract negotiation, and vendor selection.