Total Cost of Ownership (TCO)

Total Cost of Ownership, or TCO, refers to the overall costs incurred throughout the lifecycle of a product, system or IT infrastructure. In addition to the initial purchase price, a TCO calculation considers ongoing and indirect expenses. These can include installation, configuration, energy consumption, maintenance, support, licences, staffing, downtime and eventual decommissioning. In IT procurement, TCO provides a broader economic assessment of hardware, software and IT services than comparing acquisition prices alone. Organisations can use it to evaluate different procurement and operating models over a defined period. The value of a TCO analysis depends significantly on the cost factors, assumptions and usage periods included in the calculation.