Vendor Comparison Calculator
Compare suppliers on total cost rather than unit price — including freight, defects, payment terms and switching cost.
Unit price is rarely the deciding number.
How the vendor comparison calculator works
Unit price is rarely the deciding number. Total landed cost adds freight and duty; quality cost adds the defect rate times the cost of a failure; and payment terms are worth real money at any positive cost of capital.
A supplier 5% cheaper per unit with a 3% defect rate and net-30 terms can easily be more expensive than one 5% dearer with 0.5% defects and net-90.
Formula: total = (price + freight) × (1 + defect rate) − terms benefit
Worked examples
| Inputs | Cheaper supplier | Note |
|---|---|---|
| A cheaper unit price against better quality | Supplier B | B wins on total cost |
| Equal quality | Supplier B | the price advantage survives |
| Same terms | Supplier B | removes the working-capital benefit |
FAQFrequently asked questions
Why not just compare unit prices?
Because freight, defects and payment terms often exceed the price difference. The cheapest quote is frequently the most expensive supplier.
How do I cost a defect?
At minimum, the replacement unit. Realistically it also includes inspection, rework, delay and any customer impact — which usually dwarfs the unit cost.
Are payment terms really worth money?
Yes. Ninety days rather than thirty on a 45 unit at 8% cost of capital is worth about 0.6% of the price. On thin margins that matters.
What else belongs in total cost?
Minimum order quantities, lead time and its variability, tooling, and the cost of switching away later. Those are harder to quantify and often decisive.
Should I single-source?
Cheaper per unit, riskier overall. Dual sourcing costs a few per cent and buys resilience — which the last few years made expensive to learn.
Where these figures come from
- Corporate Finance Institute — EBITDA — why EBITDA is a non-GAAP measure with no single definition
- US SEC — Non-GAAP Financial Measures, Compliance & Disclosure Interpretations — the disclosure rules that exist precisely because EBITDA is not standardised
- Australian Securities and Investments Commission — the Australian corporate regulator
Last checked: September 2026. These are standard management-accounting definitions; where a term has no single agreed definition, the page says so.