What is Total Cost Of Ownership (TCO)

Horace He

Last Updated: September 10, 2023

What is Total Cost Of Ownership (TCO)

Total Cost of Ownership (TCO) is a term used in the lighting industry to describe the comprehensive assessment of all costs associated with owning and operating a lighting system or product throughout its entire lifespan. It goes beyond the initial purchase price and takes into account various factors such as installation, energy consumption, maintenance, and disposal costs.

TCO provides a holistic view of the financial implications of owning a lighting system, allowing stakeholders to make informed decisions based on long-term cost considerations. By considering all the costs involved, TCO helps identify potential savings opportunities and optimize the overall efficiency and effectiveness of lighting solutions.

When calculating TCO for a lighting system, several cost components are taken into account. These include the initial purchase cost, installation cost, energy consumption, maintenance and repair costs, operational costs, and disposal and end-of-life costs. By considering all these factors, TCO provides a comprehensive understanding of the true cost of ownership and facilitates fair comparisons between different lighting options.

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