Opportunity Cost
Definition
The financial value of the next-best alternative that is foregone as a result of making a specific strategic decision. Opportunity cost is a required component of any strategic decision model under the FFI Standard. A decision that appears financially positive in isolation may be financially negative once the foregone alternative is accounted for.
Common Misapplication
The most common misapplication is modeling the financial impact of a strategic decision without identifying and quantifying the next-best alternative. A decision to hire three engineers to build a feature in-house must be modeled against the alternative of licensing equivalent technology, not against the alternative of doing nothing.
FFI Standard Reference
This term is defined and applied in Book 6, Section 6.2: The Strategic Decision Modeling Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Opportunity Cost. https://ffistandard.org/glossary/opportunity-cost/. 2026.