Total Cost of Ownership Calculator

How it is calculated

The tool adds what you pay to get the asset and run it, then subtracts what you get back: operating total = annual cost × years and TCO = purchase price + operating total − salvage value. Purchase price is the up-front cost in dollars, annual cost is the yearly running cost (fuel or energy, maintenance, insurance, support), years is how long you keep the asset (a fraction such as 8.5 works), and salvage value is what you expect to recover when you sell or scrap it. Enter 0 for salvage if you expect nothing; the field cannot be left empty. The sum is plain: no discounting, no inflation and no change in running costs as the asset ages, so use an average yearly cost. A negative value in any of the four fields, or an empty field, gives no result. Divide TCO by years to compare options on a cost-per-year basis.

Common mistakes

• Comparing assets on purchase price alone. In this example the running costs are larger than the purchase price, so a cheaper but thirstier asset can cost more overall.
• Entering total operating cost in the annual field. The tool multiplies by years, so a lifetime total would be counted several times over.
• Entering a hopeful salvage value. Resale prices are uncertain, so check how TCO changes with a lower figure, including zero. A salvage above the purchase price plus running costs produces a negative TCO (for example -$22,000.00 at a salvage of $90,000), a sign the figure is unrealistic.
• Leaving out one-off costs such as installation, training or a mid-life major repair. Add them to the purchase price or fold them into the average annual cost.
• Entering a cost with a minus sign, for instance to model a rebate. Negative costs give no result; subtract a rebate from the purchase price instead.