Definition
Total cost of ownership (TCO)
The full cost of a piece of software over its life, including support, implementation, and admin, not just the headline price.
Also known as: TCO
Total cost of ownership (TCO) is the full cost of a piece of software across its life, not just the subscription or licence fee. It includes support and maintenance, implementation, training, and the admin time to manage it.
TCO gives a fairer basis for comparing tools and for deciding what to keep at renewal, because the cheapest headline price is not always the cheapest tool to run.
Related terms
- Renewal upliftThe price increase a vendor applies when a contract renews, often built into the agreement as a fixed annual percentage.
- Contract liabilityThe total an organisation is still committed to pay under its current software contracts, useful for budgeting and audits.
- Software renewalThe point at which a software subscription or licence reaches the end of its term and either continues, is renegotiated, or ends.