Total cost of ownership
TCO / TCO · Whole-life cost
Total cost of ownership is the sum of relevant costs across the life of a purchase, including acquisition, implementation, operation, maintenance, downtime, disposal and end-of-life effects.
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Simply put
What it means in ordinary work
It looks beyond the purchase price. Two options with the same sticker price can have very different costs once running, support and replacement are included.
Why it matters
TCO supports fair comparison between offers and helps avoid false economies. It also creates a shared language for finance, operations and procurement to discuss long-term value.
A hypothetical in practice
A hypothetical fleet team compares two van models. One costs less to buy but has higher fuel use, shorter tyre life and a lower expected resale value. The five-year TCO favours the other model.
Common pitfalls
Adding every conceivable cost can make the model unusable. Include material costs that differ between options and document exclusions.
TCO is not the same as price. Presenting a TCO estimate as an accounting liability or guaranteed saving is misleading.
Regional lens
How this lands where you work
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As-of date for date-sensitive regional content: 5 November 2026. Read the review policy.