Glossary
Total cost of ownership (TCO)
What is total cost of ownership?
Total cost of ownership (TCO) is the full cost of a system over the years you run it: what it takes to build or buy it, plus what it takes to run, check, maintain and eventually replace it.
Also called: TCO
Why it matters
AI business cases often count only the license or the model bill. Much of the cost sits elsewhere: integration, evals, monitoring, maintenance, governance, training, and the time people spend reviewing and fixing mistakes. Comparing build, buy and forego on full cost, per task done correctly, keeps you from choosing the option that only looks cheapest.
Example
A team prices a support triage agent two ways over three years. Building costs engineering up front, then model usage, monitoring and re-running evals after every change. Buying costs a license, plus integration, training and the work of switching if it ever leaves.