Our Expertise / Our Procurement expertise / Understand and control your spend / Total cost of ownership
Uncover your hidden costs
Total cost of ownership:
evaluating true cost and long term financial impact
What is Total Cost of Ownership?
The Total Cost of Ownership (TCO) encompasses all direct and indirect costs associated with a product, service, or asset over its entire lifecycle.
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Why is Total Cost of Ownership important to measure?
Most companies underestimate their hidden costs. Yet, they represent (on average) 20 to 30% of the Total Cost of Ownership of goods and services purchased. Getting a comprehensive view of these overlooked expenses is key to optimize a company’s profitability.
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Analyzing Total Cost of Ownership helps businesses make informed financial decisions by considering long-term implications rather than just upfront costs. A comprehensive TCO analysis can reveal cost-saving opportunities and improve budget planning.
Beyond the initial purchase price, it includes direct and indirect costs that accumulate over an asset’s or service’s lifespan, including:
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Maintenance fees – Repairs, upgrades, and servicing costs.
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Operational costs – Energy consumption, training, and day-to-day expenses.
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Transition costs – Migration, implementation, and change management expenses.
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Performance inefficiencies & downtime – Lost productivity due to system failures or poor performance.
Total Cost of Ownership offers you a clear picture of your full spending is key to help you reduce your costs, negotiate with suppliers, increase your return on investment and make sustainable decisions.
Benefits of Total Cost of Ownership analysis
Assessing investment opportunity
You might consider a new investment but need to get a clear and holistic understanding of the financial implications on the long-term. You need to address all the financial aspects by breaking down costs into understandable segments aligned with the investment's life cycle, from acquisition to recycling or destruction.
Bringing clarity to opaque cost structure and unexpected expenses
You find yourself frequently surprised by unanticipated expenses due to a lack of comprehensive visibility into your total costs. This lack of clarity impedes you to make well-informed financial decisions, and impacts your budgets.
Improve vendor negotiations
Lacking a holistic understanding of costs weakens your negotiation with vendors, preventing effective comparison and favorable terms. This leads to missed cost-saving opportunities and blocks your ability to justify prices to clients.
Swith to long-term focus
Focusing on immediate cost savings without considering long-term implications can lead to procurement choices that are costly over time, hindering long-term financial goals and investments in valuable solutions.
How we help you perform Total Cost of Ownership analysis
We help you understanding all your spending to reveal the real total cost of ownership of your expense or expense category. Our comprehensive analysis goes beyond the initial purchase price, to uncover hidden costs such as maintenance and repair, training, upgrades, energy use, etc. This detailed approach ensures you grasp the full spectrum of your investment impacts on the long-term.
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With this analysis, you will gain:
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Holistic cost insights
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We help uncover all hidden and indirect costs associated with your purchases to make better-informed decisions.
Sustainable procurement strategies
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Our guidance will orient you towards economically viable purchasing strategies on the long-term (eg. Make or Buy).
Strategic vendor negotiations
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Equipped with detailed cost insights from our analysis, you'll be in a stronger position to negotiate terms that are more favorable and reflective of true value.
Increased ROI
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We help you pave the way to better profitability, ensuring your investments pay off in the long run and align with your long-term financial goals.
The result
After our analytical exercise, you will receive:
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A full overview of you costs, direct and indirect, linked to a certain purchase or purchase category. This includes detailed breakdowns of expenses like maintenance, support, training, transition, and downtime.​
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Strategic insights depending on your specific needs or questions:​
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Evaluation of new investment opportunities.
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Recommendations for optimizing cost management.
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Key considerations for supplier negotiations and detailed guidance for crafting effective requests for proposals.
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Projections for future spending and cash flow, enabling better financial planning.
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What we don't do
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Creating financial strain for suppliers, understanding that fair negotiations foster long-term, mutually beneficial partnerships.
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Focusing solely on prices, neglecting key elements like payment terms impacting your company’s cash flow, or product quality impacting your maintenance costs.
