Definition: Total cost of ownership is the broader economic effect of acquiring, using, maintaining and eventually replacing or disposing of a product or service.
Why it matters in supplier selection
Landed cost focuses on bringing the item to the required location. Total cost of ownership can extend further to installation, operation, quality failures, maintenance, downtime, financing and end-of-life costs.
Practical example
Two machines have similar landed cost, but one requires more energy, maintenance and spare parts. The lower purchase price may not produce the lower ownership cost.
Fictional example: the figures or scenario are illustrative and do not describe a real supplier or client outcome.
How to use the term in a decision record
State the definition, source data, owner and decision treatment clearly. Do not use the term as shorthand for an undocumented assumption. Where the concept affects a score, cost or risk result, preserve the formula or evidence reference and the version date.