I'd say it this way...
RFP With Total Cost lets you collect an item price and also the prices of additional costs that are external to that item: taxes, freight, shipping, inventory, etc. Price plus those other factors gives you a final total cost (on which the suppliers are competing.)
RFP With Price Breakdown lets you compute an item price based on the price of terms. The supplier does not supply a price, instead the supply the value for terms which will give a final item price based on a formula. The extra pricing terms are internal to that item: they are the component costs to build it.
Total Cost: Price + Terms
Price Breakdown: Price = Terms
I hope that helps!
Building on the details Tim pointed out, one of the most significant distinctions between the Total Cost and Price Breakdown processes is that all the elements of the Price Breakdown are visible to and editable by the supplier, whereas the components of the Total Cost formulas may not be: things like switching costs that you add to (or otherwise use to affect) the bid price to arrive at the Total Cost may not be editable by, or even visible to, the supplier.
Hi Greg and Tim,
Based on your inputs i created a total cost RFP with three line items, i added few more new terms ( Installation Cost and Maintenance Cost) to each line item and created total cost formual.
Total Cost = (Price + Installation Cost ) * Qty + Maintenance Cost
Extended Price = Price * Qty
For every line item it works perfectly fine, but when i look at the total cost for all three line items together, ariba system adds only extended price of each line item without considering cost of new terms ( Installation Cost and Maintenance Cost).
I haven't tried this, so it may not work, but there should be a bidding rule called Extended Bidding Term. Try setting that to Total Cost, it might work. You will probably need to change this in the template (probably copy your template to build a new one) to test it out.