Definition
Annualised cost
A tool's cost expressed as a yearly figure, so monthly and annual subscriptions can be compared and totalled on one basis.
Also known as: Annualized cost, Annual run rate
Annualised cost expresses a tool's price as a yearly figure regardless of how it is actually billed, so a monthly subscription and an annual one can be compared and added together on the same basis.
It is the figure to use when totalling software spend or ranking tools by cost, because raw billing amounts on different cycles are not directly comparable.
Related terms
- Total cost of ownership (TCO)The full cost of a piece of software over its life, including support, implementation, and admin, not just the headline price.
- Renewal upliftThe price increase a vendor applies when a contract renews, often built into the agreement as a fixed annual percentage.
- Contract liabilityThe total an organisation is still committed to pay under its current software contracts, useful for budgeting and audits.