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Text of the page (random words):
total cost of ownership wikipedia jump to content main menu main menu move to sidebar hide navigation main page contents current events random article about wikipedia contact us contribute help learn to edit community portal recent changes upload file special pages search search appearance donate create account log in personal tools donate create account log in contents move to sidebar hide top 1 use of concept toggle use of concept subsection 1 1 computer and software industries 1 2 facilities and built environment 1 2 1 developing standards for tco in facilities 1 3 transportation 2 limitations 3 see also 4 notes 5 references toggle the table of contents total cost of ownership 19 languages العربية azərbaycanca dansk deutsch español eesti فارسی français עברית italiano 日本語 한국어 lietuvių polski português русский svenska українська oʻzbekcha ўзбекча edit links article talk english read edit view history tools tools move to sidebar hide actions read edit view history general what links here related changes upload file permanent link page information cite this page get shortened url switch to legacy parser print export download as pdf printable version in other projects wikidata item appearance move to sidebar hide from wikipedia the free encyclopedia financial estimate accounting concept this article needs more citations please help improve this article by adding citations to reliable sources unsourced material may be challenged and removed find sources total cost of ownership news newspapers books scholar jstor august 2014 learn how and when to remove this message total cost of ownership tco is a financial estimate intended to help buyers and owners determine the direct and indirect costs of a product or service it is a management accounting concept useful in full cost accounting or even ecological economics where it includes social costs tco recognises that ownership costs are significantly greater than the cost of purchasing or acquiring a product a 1 for manufacturing as tco is typically compared with doing business overseas it goes beyond the initial manufacturing cycle time and cost to make parts tco includes a variety of cost of doing business items for example ship and re ship and opportunity costs while it also considers incentives developed for an alternative approach incentives and other variables include tax credits common language expedited delivery and customer oriented supplier visits use of concept edit tco when incorporated into a financial benefit analysis provides a cost basis for determining the total economic value of an investment examples include return on investment internal rate of return economic value added return on information technology and rapid economic justification the roots of this concept date at least back to the first quarter of the twentieth century many different methodologies and software tools have been developed to analyze tco in various operational contexts a tco analysis includes total cost of acquisition and operating costs as well as costs related to replacement or upgrades at the end of the life cycle a tco analysis is used to gauge the viability of any capital investment an enterprise may use it as a product process comparison tool it is also used by credit markets and financing agencies tco directly relates to an enterprise s asset and or related systems total costs across all projects and processes thus giving a picture of the profitability over time tco analysis was popularized by the gartner group in 1987 2 computer and software industries edit tco is applied to the analysis of information technology products seeking to quantify the financial impact of deploying a product over its life cycle these technologies include software and hardware and training technology deployment can include the following as part of tco computer hardware and programs network hardware and software server hardware and software workstation hardware and software installation and integration of hardware and software purchasing research warranties and licenses license tracking compliance migration expenses risks susceptibility to vulnerabilities availability of upgrades patches and future licensing policies etc operation expenses infrastructure floor space electricity for related equipment cooling backup power testing costs downtime outage and failure expenses diminished performance i e users having to wait diminished money making ability security including breaches loss of reputation recovery and prevention backup and recovery process technology user training audit internal and external insurance information technology personnel corporate management time long term expenses replacement b future upgrade or scalability expenses decommissioning in the case of comparing tco of existing versus proposed solutions consideration should be put toward costs required to maintain the existing solution that may not necessarily be required for a proposed solution examples include cost of manual processing that are only required to support lack of existing automation and extended support personnel facilities and built environment edit total cost of ownership can be applied to the structure and systems of a single building or a campus of buildings pioneered by doug christensen and the facilities department at brigham young university starting in the 1980s the concept gained more traction in educational facilities in the early 21st century 3 the application of tco in facilities goes beyond the predictive cost analysis for a new building s first cost planning construction and commissioning to factor in a variety of critical requirements and costs over the life of the building replacement of energy utility and safety systems continual maintenance of the building exterior and interior and replacement of materials updates to design and functionality and recapitalization costs a key objective of planning constructing operating and managing buildings via tco principals is for building owners and facility professionals to predict needs and deliver data driven results tco can be applied any time during the life of a facility asset to manage cost inputs for the life of the structure or system into the future 4 developing standards for tco in facilities edit appa an ansi accredited standards developer 5 published appa 1000 1 total cost of ownership for facilities asset management tco part 1 key principles as an american national standard in december 2017 appa 1000 1 provides financial officers facility professionals architects planners construction workforce and operations and maintenance o m personnel the foundation of a standardized and holistic approach to implementing tco key principles implementation of tco key principles can improve decision making maximizing financial strategies over the life of an asset starting at the planning and design stage and extends to the end of the asset s life appa 1000 2 slated for publication in 2019 will focus on implementation and application of key tco principals in facility management transportation edit the tco concept is easily applicable to the transportation industry and to motor vehicle ownership for example the tco defines the cost of owning an automobile from the time of purchase by the owner through its operation and maintenance to the time it leaves the possession of the owner comparative tco studies between various models help consumers choose a car to fit their needs and budget for personal vehicles in the united states aaa s annual your driving costs study estimated the average total cost of new vehicle ownership at 11 577 per year in 2025 driven by depreciation financing fuel insurance maintenance and license fees 6 in the truck industry tco is an essential factor for truck fleet managers by calculating the total cost of ownership of a truck the truck manager obtains a price per kilometer that varies according to fuel costs the purchase price and the resale price of the truck if the truck is financed the tco also varies according to the interest rate on the loan these factors in the trucking industry allow managers to make a clearer choice about which truck to select for their truck fleet because when a transportation company wants to acquire 1 to 10 trucks tco is an essential factor to consider for the company s cash flow some of the key elements incorporated in the cost of ownership for a vehicle include 7 depreciation costs fuel costs insurance financing repairs fees and taxes maintenance costs opportunity costs downtime costs limitations edit tco does not assess how well a solution offers value for money or how well it fits with an organisation s strategic objectives some tco analyses may include social and environmental costs but this is not always the case 1 see also edit cost to company ctc capital expenditure capex operating expense opex activity based costing life cycle cost analysis total benefits of ownership total cost total cost of acquisition vendor lock in notes edit one uk government publication refers to the often used example of a rescue puppy which is free to acquire but incurs significant maintenance costs over its whole lifetime 1 uk government documentation does not include replacement within tco but it does include retirement disposal and migration of data and users to a replacement product or system 1 references edit 1 2 3 4 cabinet office and home office total cost of ownership things to consider v1 0 no date accessed on 14 october 2025 about gartner tco christensen douglas k rose rodney ruprecht terry w 2006 buildings the gifts that keep on taking appa isbn 1 890956 37 6 the total cost of ownership pdf facilities manager 32 4 july august 2016 archived from the original pdf on 2018 02 15 retrieved 2018 02 14 accredited standards developers pdf archived from the original pdf on 2018 02 15 retrieved 2018 02 14 sonani ashvin j 2026 total cost of car ownership modeling guide for us drivers cars zone retrieved 2026 05 27 bartlett j the cost of car ownership over time updated 1 april 2020 accessed 28 january 2021 retrieved from https en wikipedia org w index php title total_cost_of_ownership oldid 1359304514 categories costs enterprise application integration information technology governance hidden categories articles with short description short description is different from wikidata articles needing additional references from august 2014 all articles needing additional references this page was last edited on 14 june 2026 at 14 01 utc page was rendered with parsoid text is available under the creative commons attribution sharealike 4 0 license additional terms may apply by using this site you agree to the terms of use and privacy policy wikipedia is a registered trademark of the wikimedia foundation inc a non profit organization privacy policy about wikipedia disclaimers contact wikipedia legal safety contacts code of conduct developers statistics cookie statement mobile view search search toggle the table of contents total cost of ownership 19 languages add topic