What is Total Cost of Ownership?

Total Cost of Ownership (TCO) is the concept that you can measure the "Cradle to Grave" costs incurred from owning, operating, and maintaining a product, system or service.

Total Cost of Ownership has been around for a number of years. The concept has most often been applied in the Information Technology world. In his book, Business at the Speed of Thought, Bill Gates defines TCO as

" The cost of owning, operating, and maintaining a computer system. TCO includes the up-front costs of hardware and software, plus the costs of installation, training, support, upgrades, and repairs." (p 449)

Baldor has been deeply involved on the plant floor, for more than 100 years, implementing solutions with our DODGE®, Reliance Electric™, and Allen Bradley® brands of products. We have been able to take this experience and apply a unique industrial perspective to the TCO model.

In developing the TCO Appraisal process, Baldor is the first to combine and build upon the solid fundamentals of Activity Based Costing and Total Cost of Ownership models. By coupling this strategy with a field-tested methodology and our extensive plant floor knowledge, we have uniquely applied our knowledge to develop an easy-to-use software package.

For more information about how we combine Total Cost of Ownership and Activity Based Costing to measure value, check out our white paper, Envision Value.

Contact TCO Consulting Today: Phone: 864.284.5759 E-mail: tcotoolbox@baldor.com