Glossary T Total Cost of Ownership (TCO)

Total Cost of Ownership (TCO)

Total Cost of Ownership (TCO) is a cost evaluation method that considers overall costs incurrred over the entire lifetime of a software product. TCO is an important evaluation criteria, as ongoing operational costs often weigh more heavily than initial purchase costs. A thorough TCO analysis helps avoid unexpected expenses during operation. The key cost factors within TCO include:

  • Acquisition

  • Setup and Installation

  • Recurring License or Subscription Fees

  • Integration and Customization

  • Extensions and Upgrades

  • Training

  • Maintenance and Support

  • Service-Level Agreements

  • Payment and Transaction Fees

  • Scalability Costs with Growth

  • Updates for Data Protection and Compliance

The TCO approach provides nonprofits with full cost transparency, helping to realistically assess a fundraising tool’s long-term economic viability. A careful TCO analysis ensures that the chosen solution is not only cost-effective in the short term but also economically sustainable in the long term, effectively supporting the organization in achieving its fundraising goals.