Total Cost of Ownership (TCO)
A TCO assessment ideally offers a final statement reflecting not only the cost of purchase but all aspects in the further use and maintenance of the equipment, device, or system considered.
For example, the decision to buy a television or home-theatre system may result in the following TCO analysis: the higher initial price of a high-end equipment is to be balanced by adding likely repair costs and earlier replacement to the purchase cost of the cheaper bargain brand, among other factors.
Once pass-through a cost of ownership analysis, it is quite important to understand an entrepreneur’s financial goals to arrive at a useful solution. Once opportunities for improvements are identified, the TCO process is then used to identify the alternative with the lowest total cost, based on one’s needs.