CTSEG Insights · 6 min
Total Cost of Ownership in Procurement
How to calculate the real cost of a purchase beyond unit price, including logistics, inventory, quality, finance and risk.
Direct answer
Total cost of ownership is the complete cost of a product or service, including purchase price, logistics, customs, inventory, quality, financing, delay, risk and operational effort.
What TCO includes
Unit price, freight, insurance, customs, inventory, inspection, defects, financing, currency risk, delays and management time.
Why it changes decisions
A higher-priced quote may be cheaper overall when it offers better lead time, quality and payment terms.
How to apply it
Define common cost categories, normalise all offers, price risk and compare scenarios.