The idea of life cycle costs (LCC) is to consider not only the direct costs associated with the purchase of a capital good, but also the costs of operation, maintenance and repair. Examples from everyday life show that decisions have long been made unconsciously on the basis of these considerations.
With the procurement of a new product or a new plant one can select usually between different offers and products. Here the LCC can be a large assistance, since with an analysis not only the purchase price, but also all later resulting costs are considered like e.g. the use costs or energy costs.
Therefore, the entire period of use of the capital goods is the actual decision criterion when considering which option is the most cost-effective for the investor. Since lower follow-up costs often lead to a higher purchase price in the long run to lower total costs.