Sheet 1: Purpose of the TCO Calculator

	
	

		
What is the Purpose of the TCO Calculator?
	
	

		


	
	

		
The TCO Calculator is designed to help people who are new to the concept of total cost of ownership.
	
	

		


	
	

		
It may not be particularly useful to those who are experienced and/or qualified in accounting or related disciplines - it is recommended that these people continue to use their current methodology, or seek more sophisticated software.
	
	

		


	
	

		
The calculator contains a number of categories and sub-categories of costs associated with the life-cycle of an item.  Some of these are obvious, like the purchase cost of the item, but some are things that you might not have thought of, such as the cost of outages.  The calculator is designed to prompt you to think about costs that you may not have thought of, but you only need to enter data into the fields that apply to the product that you are procuring.
	
	

		


	
	

		
The TCO Calculator will automatically calculate: 
   * an overall Total Cost of Ownership 
   * totals for the various sections, categories and sub-categories, and 
   * percentages of the TCO for each of the categories.
	
	

		


	
	

		
The TCO calculator should be used in conjunction with the Guide to the Total Cost of Ownership.  
This can be found on the website: 
	
	

		
HomePage | Procurement.govt.nz
	
	

		


	
	

		


	
	

		
Why Use the TCO Calculator?
	
	

		
Using the Calculator will help you to understand the total costs of the item, over its whole life.  
	
	

		


	
	

		
You can use the calculator to compare the TCO for several options, to make a decision about which is the least expensive over the expected lifetime of the product or service.

You can ask suppliers to present the total cost of ownership in the proposals. You may use this Calculator as a template in your tender.
	
	

		


	
	

		
Does the TCO calculator include GST?
	
	

		
This calculator is exclusive of GST.  If an item was being purchased from overseas, it would be appropriate to include customs duties as this are not claimed back by the entity via the GST process (GST is on top). See http://www.customs.govt.nz/inprivate/charges/dutiesandcharges/Pages/default.aspx for details.