The total cost of ownership or TCO refers to the total cost of owning something. This takes into consideration both the purchase price and hidden costs over the length of you owning this item.
As designers, it’s really easy to get distracted by new ideas and fresh opportunities since theirs an abundance of opportunities available for most of us these days. However, are you thinking enough about TCO when it comes to ideas you propose, clients you partner with and projects you manage? TCO is not just reserved for purchasing consumer products.
For many of us, it’s pretty easy to find the hidden costs in our work. Much of it can be found in areas such as project management, scope creep, solutions that don’t scale, technology costs, just to name a few. Where the struggle lies in recognizing the loss before it’s too late.
How do you do that? Just like you would if you were investing in any other big-ticket purchase in your life, such as a car or home. You’d do your research, consult with professionals, run through a series of questions to help ensure that the product you’re going to buy is something that’s worth the ownership. You’d ensure it fits into your life and you’d walk into this purchases with clear goals, expectations and an understanding of what value it will provide you. You don’t typically buy these purchases blind or let enthusiasm drive your decisions. You’re thoughtful.
So, why do we approach our work differently? Why do we let clients, businesses or projects into our life without really exploring the TCO of the partnership? What sounds like exciting opportunities (or a good idea) today may actually cost you a lot of time and money six months later. And for many of us, we don’t want to fire a client or abandon a project that is costing us. Instead, we work harder to try and accommodate or fix what’s broke, and before you know it, this is a cost that ends up consuming our entire life. It shows up while at work, and keeps us up at night and effects our other clients and eventually hurts our business twelve months from now like any lousy business decision.
I have found by slowing down decision making and getting really clear on TCO, it has helped ensure I don’t make as many “bad investments.” In many ways, it moves the conversation to business partnership vs. a transactional discussion about the project. It also makes it much easier for both parties to back away from the investment before it’s too late. After all, they too are likely evaluating the TCO of working with you.