Definition: The Total Cost of Ownership (TCO) is a financially calculated number that estimates the total direct and indirect costs of owning an assets. Total cost of ownership became widely accepted in the information technology world in the late 1980's though the efforts of the Gartner Group (an industry leading consulting company).
In calculating the total cost of ownership for a computer, the following items may be considered:
- Purchase cost and depreciation of the computer
- Software purchases
- Support personnel salaries and benefits
- Implementation costs
- Network infrastructure costs
- Server costs
- Mid-level management costs
- Etc.
An exact formula to calculate the total cost of ownership does not exist. Each and every company operates differently. Therefore, what is relevant for one company may be irrelevant for another.
Also Known As: Total Cost Of Ownership, TCO
Examples:
The Total Cost Of Ownership (TCO) for a PC at our company is $900 per year.