StarLabs Glossary / IT Procurement Terms
TCO — Total Cost of Ownership
What a laptop or phone really costs your business, from the day you buy it to the day it leaves.
Total cost of ownership (TCO) is the full cost of a device over its working life, not just the price on the invoice. For a business laptop or phone, it adds up the purchase price, setup, software, support, repairs, lost staff time when it breaks, and the cost of wiping and disposing of it at the end.
How it works
When you compare two laptops, the cheaper one is not always the cheaper choice. A low-cost model with a short warranty, a weak battery and no business support can cost more over three or four years than a better-built machine. TCO is a simple way to see this. You list every cost the device will create, spread over the years you expect to use it, and compare the totals.
Most SMEs keep a laptop for three to five years and a phone for two to four. The costs usually fall into six groups:
| Cost group | What it includes |
|---|---|
| Purchase | Device price, accessories, extended warranty, software licences tied to the device |
| Setup | Installing apps, joining it to your systems, moving data from the old device, staff time to get going |
| Support | Helpdesk time, updates, security tools, device management licences |
| Downtime | Hours a staff member cannot work while the device is slow, broken or away for repair |
| Repairs | Batteries, screens, keyboards, liquid damage, anything outside warranty |
| Disposal | Data erasure, collection, recycling, minus any resale or trade-in value |
A worked example (illustrative only)
The figures below are made up to show the method. They are not quotes, and real costs vary a lot by brand, model and how your team works.
| Over 4 years | Laptop A (budget) | Laptop B (business) |
|---|---|---|
| Purchase | $900 | $1,500 |
| Setup | $150 | $150 |
| Support | $400 | $400 |
| Downtime (16 hrs vs 4 hrs at $40/hr) | $640 | $160 |
| Repairs outside warranty | $350 | $0 (covered) |
| Disposal minus resale | $50 | -$100 |
| Total | $2,490 | $2,110 |
In this example the laptop that cost $600 more on day one ends up $380 cheaper over four years. The biggest swing comes from downtime, which most owners never count.
What it means for your business
Before you approve a batch of laptops or phones, ask for the warranty terms, the expected life and what repairs cost outside cover, not just the unit price. Put a number on an hour of a staff member’s time and include it. For a ten-person office, a few hours of lost work per device per year can outweigh the price gap between models. Keep the figures in your asset register so the next refresh decision is based on real data.
Common questions
How do I calculate the TCO of a laptop?
Add the purchase price, setup, yearly support and software, expected repairs, the cost of staff downtime and disposal costs, then subtract any resale value. Spread the total over the years you plan to keep it to get a yearly or monthly figure you can compare.
Is a cheaper laptop always lower TCO?
No. Cheaper models often have shorter warranties, lower build quality and fewer business features. If they break more often or slow staff down, the extra repair and downtime costs can wipe out the savings.
How long should a business keep its laptops?
Many SMEs plan for three to five years. Past that point, repairs, slower performance and the end of security updates usually push TCO up, so it often makes sense to replace rather than repair.
Related terms
Leasing vs Buying →Next-Business-Day Warranty →IT Asset Register →Preventive Maintenance →Planning a laptop or phone refresh?
We help SMEs compare options on total cost, not just sticker price.
Reviewed by the StarLabs technical team · Last checked 18 October 2026
