Total Cost of Ownership

An analysis that takes into account not just the cost of obtaining an item, but also the cost of using it and disposing of it.

When considering the cost of an item it is usual in business to take into account all the costs associated, since the goal is to minimise the total cost over the lifetime. To take an example many printer manufacturers deliberately reduce their purchase costs in order to attract buyers knowing that most of the costs come from the sales of ink cartridges. Of course this approach has a long history, originally pioneered by Gillette when selling razor blades.

Links to this page

The following pages link to here: Balance Triangle, Six Sigma