Total cost of ownership estimates the complete cost of acquiring, operating, maintaining, supporting, and disposing of an asset, service, or supplier relationship. It helps buyers compare options whose purchase prices are similar but whose implementation, usage, risk, or lifecycle costs differ.
Quick reference for Total cost of ownership (TCO)
| Check | What it means for the transaction |
|---|---|
| Category | Pricing and profitability |
| Record to keep | Record the cost basis, currency, quantity, customer scope, effective period and approval behind the amount when they apply. |
| Do not infer | A price label alone does not establish margin, landed cost or the final invoiced amount. |
Total cost of ownership (TCO) and nearby terms
- Bid evaluation: Bid evaluation is the structured review of supplier offers against stated commercial, technical, delivery, compliance, and risk criteria.
