Total Cost of Ownership (TCO)

Formal

Stands for ‘total cost of ownership’ - and is a measure of the full cost of ownership of a business asset through its useful life. It includes original cost plus running costs, financial and tax implications. Often used to compare relative costs of lease / rental against ownership. NOT a measure of ROI.

Real-world Example

A company compares two delivery vans: one is cheaper to buy but costs more to fuel and maintain. Calculating the TCO for each over a 5-year life reveals which one is actually cheaper overall.