Need new machinery for your facility? Make sure to consider the total cost of ownership instead of just buying your machines solely based on sales price, or you could end up spending more than you anticipated. Here’s what you need to know about the lowest cost vs. total cost of ownership for packaging machinery.
Lowest Cost vs. Total Cost of Ownership
When you’re shopping for a new piece of machinery, one of the first things that catches your eye is probably the price listed on the manufacturer’s website or on the quote you receive from the sales manager. This is the upfront cost of the machinery—the sales price. For those operating on a limited budget, it can be tempting to buy the cheapest piece of machinery available. But ironically, the cheapest machine can end up costing more than the most expensive machine in the long run.
What? How does that work? The price you see on the manufacturer’s website or on the quote usually doesn’t list the total cost of ownership (TCO)—it only includes the initial purchase price. What’s the TCO, you ask? The total cost of ownership is the purchase price plus the costs associated with operating the machine. That includes maintenance, repairs, downtime, and more.
How Cheap Machinery Costs You More
Let’s pretend that you just bought a low cost machine for a fraction of the price it would have cost you to buy one at a higher price. The manufacturer you bought from may offer a shorter warranty period, repair services, or spare parts kits. That’s fine because you’re saving a ton of money, right?
Here’s where the problems begin. You bought this machine to replace one that broke down, so your facility was noticeably less productive while you waited for your new machine. That’s money lost. Now that you have your machine, you have to set it up. But you don’t know how to do it yourself, and since many discount manufacturers don’t offer assembly services, you must hire someone else to set it up. That’s more money lost.
Finally, your machine is up and running. Everything goes fine for a few days. But then, out of nowhere, the machine breaks down. Since its lower quality and in some cases pre-owned, it doesn’t run as well as a higher quality machine would and wears down at an accelerated rate. Since the manufacturer may not offer repair services, you need to hire someone else to inspect and troubleshoot your machine.
Your technician says you need to replace a certain part. Alright. You don’t have a spare parts kit but ordering a new part online shouldn’t be too difficult or take too long. Except the part you need isn’t in stock. You need to wait for it to be made and then shipped, which leads to even more downtime at your facility.
From there on out, your machine continues to break down occasionally. You have to go through the same process again and again—hiring a technician, dealing with downtime as you wait for replacement parts to arrive, and having those parts installed. And after just a few years, your machine breaks down for good because it’s old. Now you have to buy a replacement.
See why total cost of ownership matters? Just because a machine has a cheap purchase price doesn’t mean it’s actually cheap.
What’s Included in the TCO?
The TCO includes both the direct and indirect costs of operating a piece of machinery. Here’s what you need to know about lowest cost vs. total cost of ownership for packaging machinery, including some of the main factors that contribute to TCO.
The purchase price of the machine is one thing that contributes to TCO. In most cases, splurging on the machine itself will keep other costs low. A new machine will break down less frequently, be easier to secure replacement parts for, have more features that improve productivity and ROI, and have a much longer lifespan than older and pre-owned machines.
Maintenance Costs and Downtime
Maintenance costs also contribute to the TCO. Because newer machines break down less frequently, they usually cost less to maintain. And because they’re easier to source parts and find technicians for, it rarely takes more than a few days to get them up and running again after they break down. But there are other factors that can affect maintenance frequency and cost.
One of those factors is the manufacturer you buy from. Do they offer warranties that cover part of the repair costs? Do they offer live technical support and same-day repairs to keep downtime to a minimum? How long does it take them to source and ship replacement parts? Do they offer a preventative maintenance plan to keep your machine from breaking down in the first place? A supportive manufacturer makes it much easier and much less costly to keep your machines in optimal condition.
How much power will it take to run the machine? How much space will the machine take up? Do you have to purchase additional software for the machine? How many people does it take to operate the machine? These are all questions that help determine the operating cost of a machine. To keep operating costs low, look for machines that are automatic (require no operator and minimal human interface) and have a modular design (compact and don’t take up much space).
Return on Investment (ROI)
Ideally, you want the fastest return on investment (ROI) as possible. The faster you make your money back, the sooner you can start making a profit from your new machine. Newer machines with more advanced technology tend to improve productivity more than outdated machines.
The older and lower quality the machine, the more it costs to maintain. And eventually, all pieces of machinery will become outdated and need to be replaced. The newer and higher quality your machine, the cheaper it is to operate and the longer you can use it for.
Robopac USA’s automatic stretch wrap machines have a reasonable upfront cost and a low TCO. They’re manufactured with superior technology to ensure the fastest return on your investment. Shop with us today or contact us to learn more about our products and services!