Total cost of ownership
The whole burden of buying, running and living with a solution across its life. Used to change the subject from price before procurement raises it.
Price is what the customer pays on the invoice. Total cost of ownership is the whole burden of buying, running and living with the solution across its life: the one-time costs, the recurring costs, and, in the book’s fuller version, the social and environmental costs the customer’s own board is now asked about. For services the same idea becomes total cost of partnership, which includes what it costs the customer to work with you.
The supplier who raises TCO first wins the framing. A cheaper competitor whose product needs twice the maintenance is not cheaper, and the customer’s procurement team will not do that arithmetic for you. It is the cost side of the value equation, and the one place where a supplier with a higher price can be the lower-cost option without lowering anything.
Set out in full in: Creating Customer Value Propositions with AI (Kogan Page, 2027), chapters 7 and 8.
Related terms
Value equals impact minus total cost of ownership
Value is what remains when you take the whole cost of having the solution from the impact the customer can bank.
Value selling
Selling the proposition twice: first inside your own company, then to the customer's decision-making unit in their financial language.
Price, cost and value
Three words treated as if they were the same. Price is what the customer pays; cost is what it takes you to produce; value is the only one the customer cares about.
See the method run on one real account in three days: the One Page Proposition.