How do I calculate Total Cost of Ownership (TCO)?

What is Total Cost of Ownership (TCO)?

Total Cost of Ownership (TCO) is a financial estimate that helps buyers and owners determine the direct and indirect costs of a product or system.

How do I calculate TCO for a new software?

To calculate TCO for software, consider the purchase price, implementation costs, training, maintenance, and any operational costs over its lifespan.

Can you give me an example of TCO calculation?

Sure! If a software costs $10,000, implementation is $5,000, training is $2,000, and annual maintenance is $1,000 for 5 years, the TCO would be $10,000 + $5,000 + $2,000 + ($1,000 * 5) = $23,000.

What factors should I consider when calculating TCO?

Consider initial costs, ongoing operational costs, potential downtime, training expenses, and any future upgrades or replacements.