Annualised cost

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.

Both spellings mean the same thing. Annualized cost, with a z, is the American form; annualised cost, with an s, is the British form used here. Neither names a different calculation, and annual run rate is a third name for the same number.

Three tools: one billed £90 a month, one £600 a quarter, one £4,800 a year. On the invoice figures alone the monthly tool looks like much the smallest line, at a fraction of the annual one. Annualised they are £1,080, £2,400 and £4,800, and the picture changes: the quarterly tool costs more than twice the monthly one, and the annual tool is about four and a half times the monthly one rather than the fifty-three times the raw invoices imply.

The arithmetic is only a multiplication, twelve for monthly and four for quarterly with an annual price taken as it stands, but it is the step that makes a total mean anything. Adding £90, £600 and £4,800 gives £5,490, a number that describes no period at all. The annualised total is £8,280, and that is a figure a budget can be set against.

A one-off purchase is the exception. It has a cost but no recurrence, so annualising it would invent a yearly commitment that does not exist. It belongs in a one-time figure of its own, not in the run rate.

Every record carries a cost and a billing cycle, and the register turns the two into an Annual cost column, so tools on different cycles can be ranked against each other without anyone converting anything by hand. It is not one of the columns shown by default: add it from the Columns button above the table.

The reports read that same conversion rather than repeating it, so a total on a report and a column in the register cannot drift apart. The expenditure report groups annualised spend by whichever driver you pick, and one-off purchases are reported as their own one-time figure rather than folded into the yearly run rate, so the two kinds of spend are never silently added together.