Identify the available choices
Determine the expected benefit of each choice
Determine the expected cost of each choice
Select the best alternative you are considering
Identify the value of the next best alternative you did not choose
Subtract the chosen option’s value from the next best alternative’s value
Use the formula: Opportunity Cost = Value of the next best alternative – Value of the chosen option
Include both explicit and implicit costs if relevant
Compare outcomes using the same units, such as money, time, or utility
Recalculate if assumptions or expected outcomes change