The total cost of ownership of durable consumer goods: A conceptual model and an empirical application

Nicola Saccani, Marco Perona and Andrea Bacchetti

International Journal of Production Economics, 2017, vol. 183, issue PA, 1-13

Abstract: This paper proposes a general model to evaluate the Total Cost of Ownership (TCO) of durable consumer goods (e.g. cars, household appliances). The TCO approach has been developed to support purchasing decisions in the business-to-business domain: here we use similar principles to consider the business-to-consumer context. The new customer-oriented activity-based model includes 37 activities, classified by process and temporal phase. The model allows computing the costs incurred by the customer from the search and selection phase to the end of the product life. Furthermore, the paper discusses four modes of application of the model: One-to-one TCO evaluation, Average Product TCO evaluation, Average Customer TCO evaluation, and Average TCO. An empirical test on a sample of washing machines shows that customer habits (e.g. the usage frequency or the detergents used) are the most relevant factor affecting the TCO, with a far greater impact than the purchasing price. Thanks to the resolution of a number of gaps pointed out by a literature review on TCO research, the new model can be used as a decision support tool by enabling product comparisons and cost structure analysis.

Keywords: Total cost of ownership (TCO); Private customer; Washing machines; TCO literature review; General model; Durable goods (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925527316302535
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:183:y:2017:i:pa:p:1-13

DOI: 10.1016/j.ijpe.2016.09.021

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().