TCO — what is Total Cost of Ownership?
What is TCO (Total Cost of Ownership)? Total cost of ownership — how to calculate the true cost of a car, apartment, or electronic equipment.
Definition
TCO (Total Cost of Ownership) is the sum of all costs associated with purchasing, using, and disposing of an asset throughout its entire ownership period. TCO goes far beyond the purchase price, including operating costs, maintenance, financing, and depreciation.
Why is TCO important?
The purchase price is often a smaller part of the total cost:
| Product | Purchase price | TCO (5 years) | Purchase cost as % of TCO |
|---|---|---|---|
| Car (80k PLN) | 80,000 PLN | ~180,000 PLN | 44% |
| Laser printer | 1,000 PLN | ~5,000 PLN | 20% |
| Apartment (rental) | 0 PLN | ~180,000 PLN | 0% |
| Smartphone | 4,000 PLN | ~10,000 PLN | 40% |
TCO components
Acquisition costs
- Purchase price
- Taxes and fees (PCC, excise, VAT)
- Delivery/transport costs
- Installation and setup
Operating costs
- Energy (electricity, fuel)
- Consumables (toners, filters, tires)
- Insurance
- Subscriptions and licenses
Maintenance costs
- Service and repairs
- Technical inspections
- Updates and upgrades
Financing costs
- Interest on loans/leasing
- Opportunity cost of tied-up capital
Disposal costs
- Depreciation (loss of value)
- Sale costs
- Disposal
TCO in practice — examples
Electric vs combustion car
| Cost (5 years, 15k km/year) | Electric | Combustion |
|---|---|---|
| Purchase | 150,000 PLN | 100,000 PLN |
| Fuel/energy | 10,000 PLN | 35,000 PLN |
| Service | 5,000 PLN | 15,000 PLN |
| Insurance | 25,000 PLN | 20,000 PLN |
| Depreciation | 60,000 PLN | 55,000 PLN |
| TCO | 250,000 PLN | 225,000 PLN |
Printer: cheap device, expensive ink
An inkjet printer for 300 PLN can cost 5,000 PLN in ink over 3 years. A laser printer for 1,000 PLN — 2,000 PLN in toners. The laser printer's TCO is lower.
How Freenance can help
Freenance helps track asset values including depreciation and all associated costs. You see the true cost of owning your assets — from cars to real estate — and make better purchasing decisions.
👉 Calculate TCO of your assets with Freenance — freenance.io
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