The term "cost simulation" refers to a process in which various cost aspects are calculated and analyzed in advance. The aim is, for example, to obtain a realistic estimate of the total costs of a project, an activity or a company. Cost simulations are mostly used in a business and financial context to make informed decisions, plan budgets and assess risks.
Cost simulation usually involves the identification and recording of all relevant cost components, including direct and indirect costs, fixed and variable costs as well as one-off and ongoing costs.