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Total Cost of Ownership

also called TCO

The full lifetime cost of a capability, including the people, operations, upgrades and exit that a licence comparison leaves out.

finopsbuild-vs-buyeconomics

The number that decides build-versus-buy honestly. A build has no licence fee and a very large staffing cost: engineering to build, engineering to operate, security patching, upgrades, on-call, and the opportunity cost of not building something differentiating instead. A purchase has a visible licence fee and hidden integration, training, migration and exit costs.

Two components are omitted almost every time. Exit cost: what it takes to leave, including data extraction in a usable format, which is where lock-in becomes a number rather than a worry. And the cost of the team you cannot hire, since a self-managed platform requires specialists whose scarcity is itself a risk.

A five-year TCO with people included changes many decisions that a feature-matrix comparison gets wrong.