Total Cost Of Ownership Flashcards, test questions and answers

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What is Total Cost Of Ownership?

Total Cost of Ownership (TCO) is a tool for measuring the full cost of ownership for any item, from cars to office equipment. It looks at all costs associated with an item over its lifetime, including purchase price, maintenance, insurance, taxes and other expenses. By looking at these costs in aggregate, TCO can provide insight into the true cost of ownership and help owners make more informed decisions about their purchases.At its most basic level, TCO is calculated by adding up all the costs associated with acquiring and using an item over its lifespan. This includes initial purchase price as well as any additional expenses such as installation or training fees. It also includes regular maintenance costs such as software upgrades or repairs, hardware replacement parts and other supplies regularly needed to keep an item running smoothly and efficiently. In addition to these operational expenses, TCO considers taxes that may be applicable on certain items such as sales tax or property tax on vehicles; insurance premiums; storage fees; depreciation; interest charges if financed; disposal fees when it comes time to sell/dispose of an item; and any additional miscellaneous costs related to use and ownership such as fuel or parking fees for a vehicle.The ultimate goal of TCO analysis is to gain greater insight into the real cost of owning something so that businesses can make more informed decisions about their investments in equipment or technology solutions. By considering all associated costs over the life cycle of an asset it allows companies to more accurately compare different options available when making purchasing decisions for new items or services.