AI Economics: Total Cost of Ownership Models for Enterprise AI — A Practitioner Framework

Total Cost of Ownership (TCO) analysis for enterprise AI systems presents unique challenges that traditional IT TCO frameworks fail to address. This paper presents a comprehensive TCO model specifically designed for AI implementations, introducing the four-phase framework encompassing design, development, deployment, and operational costs, with attention to hidden cost multipliers. Empirical validation across 47 enterprise AI implementations reveals that organizations using comprehensive TCO models experience 40-60% fewer budget overruns.