Total Cost of Ownership

Total Cost of Ownership (TCO) is a method of assessment designed to help consumers and managers of an enterprise to assess the direct and indirect costs involved in a purchase of any component. The total cost of purchasing a component involves the direct costs or the total price of the component and other costs like service, maintenance, and operator.

It is an essential element of decision making involved in a purchase in an enterprise. Other costs like installation expenses, networking expenses, security or backup devices all form part of the indirect costs and allow a company to assess the worthiness of a component in comparison to the benefits extended by the component.