The total cost of ownership (TCO) is the cost to buy something plus the cost to operate it over its useful life. The idea is to take into consideration the total cost that a business will incur to operate an asset, not just the upfront acquisition cost.
Mostly, companies do not consider the total cost of ownership, focusing only on a product cost, and ignore the operating cost (deliver, installation, maintenance, downtime during maintenance/repair/replacement. However, operating cost is the 80% of the total amount of the ownership.
In the oil and gas industry, pipelines and equipment maintenance are key areas where TCO is considered. A more durable piping system, while expensive upfront, might have lower overall costs because of lower leak rates, reduced environmental impact, fewer safety issues, and longer intervals between necessary repairs. This is where TMC could offer value, to reduce the need for frequent maintenance and increase system reliability, lowering TCO over time.

Example:
Valve #1 product cost 5,000 USD, life-cycle is 4 years;
Valve #2 product cost 8,000 USD, life-cycle is 7 years;
Delivery, handling, installation and associated costs for both valves are 40,000 USD.

This means that after 4 years you need not only pay for the new valve, also you will need to cover cost for delivery, replacement, installation, and the main cost is the downtime required to the replacement.
In 7 years TCO for:
Valve #1 90,000 USD
Valve #2 48,000 USD
Final difference in amount is 42 000 USD in favor of Valve #2.