Avoided cost意思

"Avoided cost" is a term used in business, economics, and finance to refer to the cost that is saved or avoided by taking a particular action or making a specific decision. It represents the cost that would have been incurred if the action or decision had not been taken.

For example, if a company decides to produce a product internally rather than outsourcing it, the avoided cost would be the cost of outsourcing, which the company has saved by choosing to manufacture the product on its own.

Avoided costs can be an important factor in decision-making, as they can help businesses calculate the true cost savings or benefits of a particular course of action. By considering both the direct costs of an action and the avoided costs, businesses can make more informed decisions that are likely to be more cost-effective in the long run.