### What is Total Cost?

Buyers can create total cost auctions and RFPs in Guided Sourcing. **Total Cost** is a way of accounting for other costs of a bid, in addition to its simple price.

Project Owners using Total Cost events can specify cost items and cost terms and create total cost formulas to perform various arithmetic operations on the quoted price and factor in additional costs such as transportation, taxes, and so on to have a holistic view of the total cost involved. Cost terms can be defined as adders, subtractors, multipliers, and percent discounts, and can be set at the template or event level.

### Total Cost Event Attributes

- Terms can optionally be included in formula (include in cost field)
- Term values can be provided by the supplier or the project owner
- Supports participant specific initial values when owner provided
- Non-numeric terms can be mapped to numeric values
- Allows for detailed comparison of suppliers’ bids based on cost components
- Cost Terms usually visible to the supplier in Total Cost

### When to use Total Cost

Total cost applies to a broad range of cases, including total system cost, total landed cost, fixed-plus-variable cost, and switching cost.

A key to total cost modeling is the ability to identify terms in an event that have cost impact. SAP Ariba Guided Sourcing provides a graphical formula-builder to add these terms into a total cost **formula**. During supplier bidding and evaluation, the total costs of all items will be summed (or "rolled-up"). The formulas help show a side-by-side comparison of supplier responses on a per-term basis.