Practical use of Total Cost of Ownership (TCO) and Pricing Calculator for cost management.

A total cost of ownership (TCO) and pricing calculator is an essential tool for effective cost management, especially for businesses looking to make informed financial decisions. The TCO calculator helps organizations understand the total cost associated with acquiring, operating, and maintaining an asset throughout its lifecycle. This includes initial purchase costs, operations, maintenance, and potential disposal costs. By providing a comprehensive view of expenses, it allows businesses to compare different options and choose the most cost-effective one.

On the other hand, a pricing calculator helps determine the appropriate pricing strategy for products or services. It takes into account various factors such as production costs, market demand, competitor prices, and desired profit margins. By using a pricing calculator, businesses can ensure that their prices are competitive yet profitable, helping them achieve their financial goals while remaining attractive to customers.

Together, these tools enable businesses to effectively manage costs, optimize pricing strategies, and ultimately improve profitability and sustainability.

This blog will look at the powerful tools of TCO and pricing calculators, providing a comprehensive guide on how to use them for optimized cost management.

PART 1: USING THE TCO CALCULATOR

STEP 1: Access the TCO calculator

• Open a new tab in your web browser and type TCO Calculator.

• Click on “Total Cost of Ownership (TCO) Calculator” (Microsoft Azure)

STEP 2: Define your workload

1. Servers:

• Click on “Add workload to server”

– Workload 1:

1. In the “Operating System” drop-down menu, choose “Windows”.

2. Leave the other settings as default and click “Add Server Workload” below.

– Workload 2:

1. In the “Operating System” drop-down menu, choose “Linux”

2. Leave the other settings at default.

Step 3: Databases

Database 1

1. From the database drop-down menu, select Microsoft SQL Server.

2. From the operating system drop-down menu, select “Windows”

3. Leave the other settings as default and click the “+” on your right to clone and take you to “Database 2”.

Database 2

1. From the database drop-down menu, select Microsoft SQL Server.

2. From the operating system drop-down menu, select “Linux”

3. Leave other settings at default

Step 4: Storage:

Step 5: Networking

• In the drop-down menu under “Destination Region”, choose “Northern Europe”

• Leave other settings at default

• Click “Next”

Step 6: Adjust Assumptions

Step 7: View the report

• The price calculator will display the estimated annual/5-year cost for each service configured.

• Review the cost breakdown to understand the components of your Azure bill.

• You can see the difference between running our workloads on-premises and on Azure below: green indicates additional Azure costs and blue indicates on-premises costs.

Step 8: Consider alternatives:

• Compare the total cost of ownership of your current Azure configuration with potential alternatives (e.g., different Azure regions, service tiers, or on-premises solutions)

Step 9: Save/Share your estimate

• You can save your quote for future reference or share it with colleagues by exporting it as a PDF or Excel file.

• To save the quote, click on “Export” and choose the desired format.

PART 2: USING THE AZURE PRICE CALCULATOR

1. Click on “Azure Pricing Calculator” bottom left after viewing the TCO analysis report.

You can also access the price calculator by:

2. Select your services

• Choose the Azure services you plan to use (for example, storage).

3. Configure service settings:

Specify detailed configurations for each service (e.g. storage)

4. Usage estimation:

Enter your intended usage (e.g. storage capacity).

5. Review the prices:

The calculator will provide a detailed breakdown of estimated costs.

6. Save and share

• Cost estimates can be saved or exported in various formats for convenient sharing with the team and for future reference.

• Experiment with scenarios:

Adjust configurations and usage to find the most cost-effective options.

By combining the Azure Pricing Calculator with a comprehensive TCO analysis, you can make informed decisions about your cloud strategy and effectively optimize costs. Remember that cost management is an ongoing process that requires attention and adaptation.