What are the total cost of ownership?
The total cost of ownership (TCO) is a tool for analysis and projection that helps businesses or individuals to determine how much it costs to obtain, run and maintain an item throughout its useful life. Usually the projection is used for a piece of equipment, but could apply to a number of different areas. Domestic animals can even use it to determine the cost of ownership of a pet throughout their planned life. The total costs are likely to be very different from the initial price of the building.
In the heavy industry, the total cost of ownership is a very important part of considering pieces of industrial equipment. Heavy equipment can often require regular maintenance and repair parts may need to be made to measure. This means that the costs associated with this device will be higher and can even increase faster when the device is close to the end of its life. TCO -determining analysis can be very important to determine whether the production prevails over the expenditureEm.
In some cases, the total cost can help businesses determine whether it is better for leasing or buying equipment. For example, some rental agreements may come up with discounted services agreements that will reduce the total cost of ownership. If this is the case, the analysis reveals that leasing could be cheaper than the purchase, which will allow society to discover concerns about the end of the product's life. When it is time, it can simply get a new piece of equipment for rent or by purchasing.
Even in industries where heavy equipment is not used, the total cost of study has the potential to be beneficial. In the office environment, the purchase of information technology equipment or the establishment of a network will have a certain initial cost. The costs will be much higher after the analysis of lifelong expenditures, especially if the individual is hired. In such cases, the company can use TCO, andwould help determine what types of computers and networks are most cost -effective.
Although the total costs are most often related to business decisions, it can also play a role in personal budgeting or financing. For example, there is a difference in the initial cost of buying a pet or a car and keeping them for the rest of their lives. Once these lifetime costs are considered, the initial cost of acquisitions may be a secondary matter. Unlike enterprises that expect to receive a return on investment, individuals and families can decide for more personal reasons.