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Discover our guide on how to calculate total cost of ownership for your fleet, and how Alphabet can help. Learn from the leaders in business mobility solutions.

How to Calculate Total Cost of Ownership (TCO) for Your Fleet

<h4>When it comes to managing a fleet, one of the metrics you might find useful to understand is the <a data-entity-substitution="canonical" data-entity-type="node" data-entity-uuid="aa33c53f-d481-4cef-bc69-51337755034c" href="/en-gb/total-cost-ownership" title="Total Cost of Ownership (TCO) Consulting & Optimisation">Total Cost of Ownership (TCO)</a>.</h4>
<p>This takes into account all of the costs related to owning and operating a vehicle across its lifespan.  From vehicle acquisition and fuel costs to maintenance, insurance, and depreciation, TCO gives you a holistic picture of your fleet's operational expenses.</p>
<p>In this this blog post we’ll break down the process into manageable steps, ensuring you have all the knowledge to calculate TCO for your fleet accurately and confidently.</p>


<h2><strong>How can you calculate the TCO of your fleet?</strong></h2>
<p>Calculating TCO is all about accurately understanding and adding up all the costs associated with operating your fleet. It's a process which requires a methodical approach looking beyond ‘simple’ purchase or lease costs. Here's a general approach to help you navigate this process:</p>
<h3><strong>1. Identify cost categories</strong></h3>
<p>The first step is to identify all the relevant cost categories that apply to your fleet. These commonly include vehicle acquisition, fuel, maintenance, insurance, financing, taxes, and depreciation.</p>
<h3><strong>2. Gather data</strong></h3>
<p>Next, you need to gather as much data as possible for each cost category. This could involve collecting invoices, examining financial statements, and tracking actual or estimated values. The more accurate your data, the more reliable your TCO calculation will be.</p>
<h3><strong>3. Calculate costs</strong></h3>
<p>Now it's time to start crunching numbers. For each category, calculate the costs based on the data you've collected. This should cover both direct expenses (like fuel purchases) and indirect expenses (like administrative overhead).</p>
<h3><strong>4. Determine lifespan</strong></h3>
<p>To get an accurate TCO, you also need to estimate the expected lifespan of the vehicles in your fleet. This estimation can be based on factors like typical mileage, wear and tear, and the vehicle's make and model.</p>
<h3><strong>5. Sum up costs</strong></h3>
<p>For most vehicles, once you have established the different lifetime cost types, the calculation itself is very simple (see below).<br />
After calculating the costs for each category, add them all up over the estimated lifespan of the vehicles. If you own the vehicle and intend to sell it on at some point, work out an estimate of the anticipated resale income and subtract this from the costs. This will give you the TCO for your fleet.</p>
<h3><strong>6. Analyse and evaluate</strong></h3>
<p>With your TCO data in hand, you can now analyse it to identify potential cost-saving opportunities, compare different vehicles or strategies, and make more informed decisions to optimise fleet operations.</p>
<p>The accuracy of your TCO calculation relies heavily on the quality and reliability of the data you use. It might be a little bit of work, but having a clear understanding of your fleet TCO can have significant benefits for your business in the long run.</p>


We start by conducting a comprehensive analysis of your fleet. We track expenses in real time and calculate the TCO, effectively pinpointing costs on a granular level. This includes everything from acquisition costs, Service, Maintenance, and Repair (SMR) expenses, to insurance, tyre management, fuel and energy management and charging infrastructure.

Based on the data gathered, we make accurate forecasts of costs for assets. This enables you to budget effectively and make well-informed decisions about future fleet expansions or reductions.

Our goal is to achieve greater efficiency across your operations. By providing you with a detailed understanding of all travel-related costs and offering strategic recommendations, we aim to streamline your operations, lower costs, and increase productivity.

As we piece together your fleet’s TCO, we also uncover new insights into profitability. This helps you understand which aspects of your fleet operations are most profitable and which areas require improvement.

With an eye towards sustainability, we also compare different types of powertrains, taking into account fiscal measures currently offered by governments on a national and regional level. We advise you on the optimal fleet composition, considering electric vehicles, plug-in hybrids, and petrol-driven cars based on the needs of your drivers.

<h3>Taking control of your fleet's TCO is just a click or call away.</h3>
<h3>Give us a call on <a href="tel:01252 976 010">01252 976 010</a> and whether you’re looking to streamline processes, increase efficiency, or are considering introducing electric vehicles into your fleet, we’re ready to help with expert advice and support.</h3>
