What is Total Cost Of Ownership (TCO)

Horace He

Last Updated: December 26, 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.

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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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