Total Cost of Ownership
The full cost of owning something over its life: purchase price plus running, maintenance and disposal costs, minus resale value.
Definition
Total cost of ownership (TCO) looks beyond the sticker price. For a car it includes fuel, insurance, repairs and depreciation; for a phone, the plan and repairs; for a subscription, the cumulative cost over years. Comparing TCO often reveals that the cheapest purchase is not the cheapest to own.
Examples
• Car A costs 8,000 but needs 1,500 a year in repairs; car B costs 10,000 with 400 a year — over five years, B is cheaper. • A 10 monthly subscription costs 600 over five years. • A cheap printer with expensive ink can cost more than a pricier model.
How to calculate TCO
Purchase price + running costs + maintenance + financing − resale value, over the time you will own it.
Where people get caught
Low upfront prices, financing that hides total interest, and recurring add-ons.
Using TCO
Convert TCO to a monthly figure to compare options and to budget realistically.
Also Known As
TCO · Lifetime cost
Key Takeaways
- Look beyond purchase price.
- Include running costs and resale value.
- Compare monthly TCO across options.
Frequently Asked Questions
Yes — interest and fees are part of the cost.
Especially for subscriptions and items with consumables.
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