🛡️ RISK BADGE: 💰 FINANCIAL REALITY
Executive Summary: What is it?
Total Cost of Ownership (TCO) is the calculation of the real cost of software, not just the license fee. For Open Source, it is the sum of: License (usually $0) + Infrastructure (Hosting) + Maintenance (Engineering Hours) + Security Ops.
CFO / Business Impact: What does it cost/risk?
The "Free" Illusion. Self-hosting saves on License Fees but increases OpEx (Operational Expenditure). A $0 tool that requires 5 hours of engineering time per month costs you ~$500/month.
Technical Reality: How does it work?
- SaaS Model: High License costs, but Zero Maintenance overhead. Highly predictable but scales linearly with users.
- Self-Hosted: Zero License fees, but Variable Maintenance labor. Cheaper at scale, but more expensive to initialize.
- TCO Formula:
(Engineering Hours × Rate) + Infrastructure Cost = Real Cost.
💡 Executive FAQ
- Question: When is Self-Hosting cheaper?
- Answer: Typically when you have >50 users. SaaS pricing ($20/user) scales linearly, while self-hosting costs stay relatively flat until massive scale.
- Question: Can we ignore TCO for small tools?
- Answer: No. "Zombie Servers" (forgotten instances) accumulate financial costs and security risks over time.