Total cost of ownership (TCO)

Total cost of ownership measures the cost of buying and using an item throughout its expected life. For equipment, this may include installation, maintenance, consumables, downtime and disposal as well as the initial purchase price.

TCO makes costs visible that would be missed by comparing invoice prices alone. For equipment, relevant costs may include energy, servicing, spare parts, training and disposal, less any expected residual value. Estimates need a defined period and assumptions about usage, because different workloads can change which option is cheaper overall.

For example, a cheaper label printer may require more expensive labels and more maintenance than another model. Over three years, the initially dearer printer may cost less to operate. Landed cost covers obtaining and bringing an item to a destination; TCO extends to ownership and use over time.