---
title: Financial Cost Calculation
slug: itsm-en/financial-cost-calculation
description: Learn how to use the Financial Cost Calculation functionality in the Financial Management system with this comprehensive document. Discover the step-by-step instructions on creating and editing cost calculations, generating reports, and allocating costs b
docTags:
createdAt: 2021-10-27T20:18:38.000Z
---
## Before getting started
It is necessary:
- [x] To have defined the access permission to the functionalities of the **Financial Management**;
- [x] To have permission to use the functionality;
- [x] It is necessary to have done the financial entries, created the financial cycles and classifications;
- [x] Based on the financial entries [Register financial item](https://documentation.run2biz.com/en-us/4biz-helium/processes/financial/use/register-financial-item.html) and the "**cost distribution**" and "**set price**" tabs, it is possible to monitor all cost details (Hardware purchase, hardware maintenance, software purchase, software licenses, facility including utilities, personnel, etc.) according to the financial entry;
- [x] This monitoring of cost details can also be done through reports.
## Procedure
1. Access the main menu `Processes > Financial Management > Financial Cost Calculation`;
2. In the **Financial Cost Calculation** main screen, we have the following actions available:
| **Action** | **Description** |
| ----------------------- | ---------------------------------------------------------------------------------------------------- |
| **New** | To create a new financial cost calculation |
| **Generate CSV report** | To generate a report of CSV |
| **Advanced Filters** | To set the filters to find a cost calculation already created |
| **Edit** | Once selected a cost calculation already created, this option will appear to edit it |
| **Remove** | Once selected a cost calculation that has already been created, this option will appear to remove it |
## Registering/Editing Financial Cost Calculation
1. To create a new cost calculation, click on "**New**";
2. To edit a cost calculation already created, search for it, click on it, and then on "**Edit**";
3. Select the period you want, for example, **12 months** (**January to December**);
4. Select the service you want to make the financial calculation;
5. Enter the minimum rate.
:::hint{type="info"}
🖊 **Note****: **On a simulation, mark on the "**Forecast**" checkbox.
:::
| **Field** | **Description** |
| --------------------- | ----------------------------------------------------- |
| **Start date (\*)** | The start date for the cost calculation |
| **End date (\*)** | The date to finish the cost calculation |
| **Service (\*)** | Select the service you want to make the cost planning |
| **Minimum rate (\*)** | Set a value for the minimum rate |
| **Forecast (\*)** | Select to forecast the cost |
(\*) Indicate mandatory fields
:::hint{type="info"}
🖊 **Note****: **Select the start date and end date to make the **12-month Plan**.
:::
6\. After completing the fields, click on "**Generate**" to present the values. It will generate three tabs for values information:
### Calculation of NPV and IRR
Based on the information added in the "**Financial Item**" functionality, the tool will present the values according to the information and calculation presented in the fields:
| **Field** | **Description** |
| --------------------------- | ------------------------------------------- |
| **Month** | The month of reference to present the costs |
| **Investment** | The value of the investment |
| **Revenue** | The value of the revenue |
| **Cost/Expense** | The value of cost/expense |
| **Result** | The value of the result |
| **Present Value** | The present value |
| **Net present value** | The net present value |
| **Internal rate of return** | The value for internal rate of return |
### Cost by Category
This tab presents the appropriation of costs by categories. Here are these categories: **Investments **and **Cost distribution**.
******Investments******
| **Field** | **Description** |
| ------------------ | -------------------------------------------- |
| **Category** | The category of the distributed cost |
| Scenario variation | The percentage for the variation of scenario |
| **Cost** | The fixed cost number |
| **%** | The percentage reached |
| **Total** | The final value of the investment |
:::hint{type="info"}
💡 **Tip****: **Scenario variation: this field allows to make financial variations
:::
******Cost distribution******
The calculated costs will be appropriated in the respective services and configuration items according to the apportionment or fixed values defined in the financial entries on the [Register Financial Item](https://documentation.run2biz.com/en-us/4biz-helium/processes/financial/use/register-financial-item.html) and will be automatically associated with the service and the CI.
:::BlockQuote
**Example****:** Roll-up cost of a customer-facing service (e.g. e-mail) with the breakdown of the costs for the systems (e.g. MS Exchange, Lotus Notes) and the associated supporting IT infrastructure (e.g. servers, databases, network, storage) and applications.
:::
| **Field** | **Description** |
| ---------------------- | -------------------------------------------- |
| **Category** | The category of the distributed cost |
| **Scenario variation** | The percentage for the variation of scenario |
| **Cost** | The fixed cost number |
| **Cost breakdown** | The breakdown cost |
:::hint{type="info"}
💡 **Tip****: **Scenario variation: this field allows to make financial variations
:::
At the end of the page, we will have information about the **number of months, Investment apportionment per month, Average cost per month**, and **Total cost per month.**
### Set Price
Complete the fields available to set the prices. In the "**How to price**" field, select how to make the price, the options available are: **Fixed value**, **Variable value**, or **Both**.
- If you select the **Fixed value** option, complete the fields:
Based on the selected service in the previous "**Cost by category**" tab, the costs for the selected service will be displayed and the final service price (Final price) using will be calculated "**cost**" and "**profit**" fields.
The calculated values may be updated and published in the service catalog and in the service level agreement (**gold**, **silver**, and **bronze**).
| **Field** | **Description** |
| ------------------- | ------------------------------------ |
| **% Profit margin** | Set the margin you want to work with |
| **Cost** | Set the fixed cost |
| **Final price** | The final price for the fixed value |
- If you select the **Variable value** option, complete the fields:
Based on the service selected in the previous "**Cost by category**" tab, the costs for the selected service will be displayed and the service price will be calculated using the "**Estimated quantity**", "**Monthly unit value**" and "**Profit Margin**" fields.
The "**Estimated quantity**" and "**Monthly unit value**" fields are related to the demand metrics and will be calculated through the "**Integration flow of quality capture**" to generate the varied price, respecting the business rules and the profit margin.
The calculated values may be updated and published in the service catalog and in the service level agreement (**gold**, **silver**, and **bronze**).
| **Field** | **Description** |
| ---------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------- |
| **What is the unit of measurement** | Set the unit of measurement |
| **Estimated quantity** | Set the amount |
| **Do you accept less than expected quantity?** | Select if you accept it or not |
| **Monthly unit value** | Once completed all values in the previous fields, it'll appear the monthly unit value, with the information of % Profit margin, Cost and Final Unit Price |
| **How to calculate the amount monthly** | Select how the calculation will be made: Informed manually or Automatically calculated |
| **Integration flow of quantity capture** | Integration with internal and external systems to capture the amount of (access, services, working hours) made |
:::hint{type="info"}
💡 **Tip****: **In the "**How to calculate the amount monthly**", if it is selected "**manually**", the values should be manually informed; if it is selected "**automatically**", the integration workflow should be selected to the contabilization of services executed.
For the "**How to price**" field, at **Both ** (fixed and variable costs) option, it is possible to set a fixed cost for some cases and, if the number is not reached, it is possible to use variable costs.
:::