Capterra Glossary
IT
Total Cost of Ownership (TCO)

Capterra Glossary

Total Cost of Ownership (TCO)

Total cost of ownership (TCO) is a process where all factors of owning a product or paying for a service are considered before a business makes a purchase. For example, when a person purchases a car, they pay the initial purchase price. They will also be responsible for paying for taxes, tag and title fees, insurance, gas, repairs, and preventative maintenance. When all of these factors throughout the car's lifespan are added up, it provides the total cost of ownership.

What Small and Midsize Businesses Need to Know About Total Cost of Ownership (TCO)

Total cost of ownership is particularly important for a business that is considering upgrading its IT efforts. Because technology is ever-changing, it is essential to account for any future upgrades, hosting costs, or troubleshooting efforts before making a purchase. 

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