Why AI TCO Is So Tricky - And How To Start Calculating It
CIO, Thursday, August 27th, 2026
Direct AI service fees are only about 30% of total cost, with the rest hidden in orchestration, verification, and rework.
Grant Gross reports that calculating AI total cost of ownership is difficult because subscriptions, token costs, API calls, and compute time complicate tracking, on top of human time for verifying and correcting AI outputs.
Presidio's Chris Cagnazzi says AI service bills represent only about 30% of total costs, with 70% hidden in orchestration, retrieval, observability, and inefficient prompt rework.
Recommended steps include establishing visibility across all AI models and usage, mapping usage to specific users or departments, identifying cost anomalies, and encouraging adoption of more cost-efficient models.