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AZ-900Chapter 52 of 138Objective 1.4

Total Cost of Ownership (TCO) in Cloud

This chapter covers Total Cost of Ownership (TCO). AZ-900 tests under 1.4.

5 min read
Beginner
Updated Aug 20, 2026
Editorial oversight: Johnson Ajibi· Security Systems Architect · MSc IT Security · IEEE Senior Member

A simple way to picture Total Cost of Ownership (TCO) in Cloud

Lifetime Cost

Buying a cheap car might have high maintenance costs. Total cost includes purchase and lifetime operating costs. TCO does the same for infrastructure.

How It Actually Works

TCO accounts for all costs: hardware, software, labor, power, cooling. Cloud TCO typically lower than on-premises for most organizations, but varies by workload.

Walk-Through

1

Identify all costs

Hardware, software, labor, power, cooling are included.

2

Compare on-premises vs cloud

Total costs are compared.

3

Evaluate benefits

Non-cost factors (agility, scalability) are considered.

What This Looks Like on the Job

On-premises: $200k hardware + $50k annual labor + $30k annual power = $280k year-1, $80k subsequent years. Cloud: $100k annual = likely lower TCO long-term.

How AZ-900 Actually Tests This

Objective 1.4 expects understanding of TCO as a cost comparison tool.

Key Takeaways

Includes all costs: hardware, labor, power, etc.

Cloud TCO typically lower long-term.

Supports business case for cloud adoption.

Frequently Asked Questions

What is Total Cost of Ownership (TCO)?

It accounts for all infrastructure costs — hardware, labor, power, cooling — comparing on-premises vs cloud approaches for the true cost comparison.

Terms Worth Knowing

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