Lapasar
Spend & Cost Management

Cost Avoidance

Also known as: Soft savings

Cost avoidance is procurement value that prevents future or potential cost increases, rather than reducing current, budgeted spend.

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Cost avoidance captures savings that do not show up as a lower invoice — negotiating away a proposed price increase, avoiding a penalty, or securing added value at the same price. Because it is measured against what would have happened, it is often called 'soft' savings.

Cost avoidance is real value but harder to prove than cost reduction, which lowers actual spend against budget. Procurement teams typically report both, and distinguish clearly between them so finance can reconcile savings claims with the budget.

Frequently asked questions

What is cost avoidance?
Cost avoidance is value that prevents a future or potential cost — such as negotiating away a proposed price rise — rather than reducing current spend. It is often called soft savings.
What is the difference between cost avoidance and cost savings?
Cost savings (hard savings) reduce actual spend against budget. Cost avoidance (soft savings) prevents costs that would otherwise have arisen, so they do not appear directly in the budget.

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