Total Cost of Ownership TCO
What a system costs over five years once hosting, support, changes, training and card fees are added to the build price.
Also known as TCO lifetime cost true cost of software
Definition
Total cost of ownership is what a system really costs you over its life, not what it costs to build. People compare two quotes, take the cheaper one, and get a surprise eighteen months later. The build price is usually less than half of what you pay across five years.
Here is the rest of it. Hosting, which is the rented computer your system lives on, paid every month. The domain name and the security certificate, paid every year. Support, meaning somebody who answers when something stops working. Changes, because you will want them, a new report, a second branch, a field nobody thought of. Training, because staff leave and new people arrive. And card fees, which take a small share of every payment and are easy to forget until you add up a whole year of them.
Write all of that down as a five-year figure before you choose anything. Linkysoft does this on one sheet of paper with the client, and it changes the decision more often than not. A system that costs twice as much to build but needs one day of changes a year can be cheaper than the bargain that needs one day a month.
The honest comparison between ready-made and custom looks like this. A ready-made system is cheaper to start, quicker to open and already tested by other businesses. You pay every month for as long as you use it, and you fit your way of working to the software. A custom build costs more at the start and takes longer. It fits your business exactly, you own it, and the cost afterwards is mostly hosting and support. If your trade works the way most of your trade works, buy ready-made. If the thing you do differently is the reason customers choose you, build it. Linkysoft sells both, which is why we say it plainly.
So look at the ready-made systems first and see whether one of them already does eighty per cent of what you need. If none does, ask about a custom web application. The first question we ask is how many hours a week your staff spend on the task today, because that number, multiplied by a wage, is the money the system has to save before it has paid for itself. Very few suppliers will do that sum with you. Ask anyway.
Questions about Total Cost of Ownership
Which costs do people forget when they buy a business system?
Is a custom system always more expensive than a ready-made one?
How do I know whether a system will pay for itself?
Should I ask a supplier for a five-year cost in writing?
Still not sure how this applies to your project?
Tell us what you are building and we will answer in plain language.