Linux Know-How provides a collection of introductory texts on often needed Linux skills.

# Total cost of ownership

Nobody really knows how to calculate the "total cost of ownership" of a general piece of software, no matter how clever terms they use. So a good lawyer + accountant can prove whatever point they are paid to make. They appear to regularly do so.

For example, does your calculation of the "total cost of ownership" of MS Word include the cost of exiting the platform? If not, do you really believe, that MS Word will be your documentation platform *forever*?

Let me try a simple estimate of how much the average total cost of the ownership of MS Windows is. Let's add the fortunes accumulated by all the MS Windows software makers. Add all the salaries of all generic Windows programmers, consultants, support and training personnel, IT management, etc. Add the cost of the hardware for MS Windows. Now, add the losses in productivity customers must surely have suffered while the software corporations were presenting them with "new features" so as to make them upgrade and/or achieve their current lock-in status. Divide this sum of money by the number of years (whatever time frame you selected), and the number of MS Windows users (only in the countries in which software is normally paid for). Here is the TCO of MS Windows. However you count it, it will be many thousands of good US dollars per average joe per year. You didn't pay that much money? Well, you must have, it has just been hidden from you (probably in the price of seemingly unrelated products and taxes). Yes, developed countries waste billions of dollars on software every year.

How much did Linux cost? Hardly anything. The number of users is much lower, too, but you will be hard pressed to come up with \$10 per user per year.

Yet, in my opinion, the total cost is not what matters the most. What value did I receive for my money? You would have to calculate the total value of ownership (TVO?), then subtract from it the total cost of ownership (TCO) to obtain the "net benefit of the ownership" (or "return on investment"). Well, I cannot see how I would be making a good investment by purchasing the latest version of MS Windows or Office, by putting myself deeper into a single-platform dependency. My Linux based email, web browser and word processor work as well as anything available on MS Windows.

I guess accountants typically talk about the TCO for software "necessary for doing business," and thus skip the issue of the value, benefit, and the return on investment. There is really no value in the mainstream software, it is just the necessity for doing business these days. Well, Linux satisfies my computing necessities at zero monetary cost, and the personal pleasure and learning value are great.

Last Update: 2010-12-16