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Total Cost of Ownership (TCO)
Total cost of ownership (TCO) is a process where all factors of owning a product or paying for a service are considered before a business makes a purchase. For example, when a person purchases a car, they pay the initial purchase price. They will also be responsible for paying for taxes, tag and title fees, insurance, gas, repairs, and preventative maintenance. When all of these factors throughout the car's lifespan are added up, it provides the total cost of ownership.
What Small and Midsize Businesses Need to Know About Total Cost of Ownership (TCO)
Total cost of ownership is particularly important for a business that is considering upgrading its IT efforts. Because technology is ever-changing, it is essential to account for any future upgrades, hosting costs, or troubleshooting efforts before making a purchase.
Related terms
- Procurement
- Bill of Materials (BOM)
- Advanced Driver Assistance Systems (ADAS)
- Smart Factory
- Strategic Sourcing
- Value-Added Reseller (VAR)
- Telematics
- Supply Chain
- Vendor
- Enterprise Resource Planning (ERP)
- Supply Chain Planning (SCP)
- Scanner
- SCADA (Supervisory Control and Data Acquisition)
- Total Quality Management (TQM)
- Vendor Management
- Senpai
- Radio-frequency Identification (RFID)
- Loopback
- Total Cost of Ownership (TCO)
- Electro Mobility (e-Mobility)
