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.

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.

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).

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.

For most vehicles, once you have established the different lifetime cost types, the calculation itself is very simple (see below).

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.

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.

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.