Commercial
Total cost of ownership
Also called
- TCO
Build cost is the visible number and frequently the smaller one. Total cost of ownership adds hosting and licensing, the maintenance and security patching, the support load, the cost of the eventual migration, and the internal time the system consumes every month.
It is also where the cheapest proposal often loses. A build that saves 20% up front and requires a specialist nobody else employs has moved the cost rather than removed it.
The question to ask any vendor: what does this cost to run in year two, and who can run it besides you? The second half of that question is the important one.
Comparing proposals on build price alone reliably selects the option that is most expensive to live with.
Commonly misunderstood
What people get wrong
The claim
“Open source means no licensing cost.”
What is actually true
It means no licence fee. Operation, patching, upgrades and expertise are still costs, and they are frequently larger than the licence would have been.
Where this comes up
Services where it matters
Related terms
Next step
Working through a total cost of ownership decision?
Tell us the situation. We will give you the tradeoffs as we see them, including when the answer is that you do not need what you are being sold.
No pitch deck. A 30-minute conversation about what you are trying to achieve.