TCO
Finance
TCO (Total Cost of Ownership)
Total Cost of Ownership
Total lifecycle cost of an acquisition including purchase, logistics, operation, maintenance, quality, downtime and disposal.
Examples
- 01The TCO of a supplier includes price, freight, duty, quality problems, safety stock and the cost of handling complaints.
- 02Purchasing compares the TCO of three bearing suppliers instead of looking at unit price alone.
- 03A supplier with a 5 % higher price is chosen because its TCO is 8 % lower thanks to fewer defects and shorter delivery times.