Usually clear to both the customer and the company. Maintenance and service costs, or accessories needed to use the product.ĭirect costs are relatively easy to calculate and are
This can include things such as the price, any When calculating the total cost of ownership that we want toĬonvey to our customers, we should address some of the following factors.ĭirect costs are all the costs that are directlyĪttributable to the product. The marketing mix, we should look at both sides. Some might apply from a company’s perspective and When considering the total cost of ownership, there are manyįactors to be considered. Total cost of ownership is a core concept when applying theĬost component of the marketing mix. The value of our product to our customers. When looked atĪs a marketing concept, we can use the total cost of ownership to communicate Total cost of ownership is a concept that can be appliedįrom a consumer’s point of view and a marketing point of view. It will take into account all direct and indirect costs. This will include the initial purchase the product, as well as the ongoing costs to maintain and use the product. Total cost of ownership is the complete cost of a product over the products lifetime. To properly address, we need to understand our customer and the factors they care about. It includes price and it can drive much of our marketing activities and messaging. The concept is understanding what the customer will face inĬost is an important component of the marketing mix. This is the all-encompassing cost factor that aĬustomer is faced with when using your product.
The total cost of ownership are all the costs that areĪssociated with a product. Whether it is a simple consumer product or a complex business toīusiness product, there will be some acquisition costs. These are the costs to be addressed with onboarding newĬustomers. New processes, time to take possession, and anything related to starting with a We can use this to alleviate the uncertainty of newĪcquisition costs are the costs associated with beginning to Opportunity cost is addressing what our customers give up in In the overall cost of the product and our marketing messaging. They are either giving up something to use our products. Opportunity costs need to be addressed with our customers. It drives many other considerations about our customers and our product. Also, this is the most common factor we think of when addressing cost for our customers.Ĭonsidering the price, what we set for our customers is important. This is the number that is going to set the baseline for a customer to acquire and use your product. So, financing solves the problem.Īddressing money in the cost is understanding the price of your product and the costs that are associated with it from the customers perspective. Where money can be a deterrent because of the largeĪmount that is needed. Thus, toĪlleviate this factor, companies provide many financing options. Incorporating money into the equation can determineįor example, cars require large up-front costs. Or, the ongoing money needed toĬontinue using the product. This can be the moneyĪ customer needs to acquire the product. Alternatively, it can be a hindrance to customer acquisition. It can be looked at as the time it takesįor example, some products can have a steep learning curve, which can be great for customer retention. This is the time it takes to get the product, as well as the Often, time is a concept and factor that we overlook in theĬost of products.
The following are a few cost factors we should consider These are direct costs, indirect costs, time, and money. Other factors we only realize after we have the product, use it, and wish we thought about it before. Some we think about before every purchase. Ultimately, it is about the total cost of ownership of a product. It creates a holistic view of the customers perspective for acquisition and use of your product. The cost component can include things like the price, the cost of switching, the time it takes to learn a new product, and any ongoing maintenance costs. It includes every aspect of cost that a customer may face when using your product. Here, we will address various aspects of cost as a componentĬost is the concept in the 4Cs marketing mix model that looks at the cost of acquiring and using a product from the customers perspective. This provides an effective way to address the price of our products. Thus, cost as a marketing mix concept allows us to holistically look at the cost of a product from our customers perspective. The price that they pay for our products. Cost is a critical component to our customers.
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