When you decide to purchase construction equipment, the first thing you usually look at is the price. But price is far from the only parameter that will determine how much it will ultimately cost to own this equipment. That is why companies that make calculations thoughtfully and strategically focus not on the purchase price, but on the Total Cost of Ownership (TCO). This concept covers all the costs associated with the operation of the equipment throughout its entire service life. Your profit in the future will directly depend on how competently you approach the TCO assessment already at the stage of choosing the equipment.
What is the Total Cost of Ownership
TCO is not just the amount you will pay the supplier. It is the sum of all the costs that will arise when the equipment comes into your possession and will end only on the day you get rid of it. Moreover, each type of equipment – be it a boom lift, a telehandler, or a scissor lift – will have its own unique cost profile.
If you are planning to build a sustainable and cost-effective fleet, calculating the total cost of ownership will help you avoid unnecessary expenses and determine how reasonable a particular purchase is.
What is included in TCO: Cost Structure
To better understand what expenses need to be taken into account, it is worth considering the structure of the total cost of ownership. Here are the main elements:
- Purchase price: the base price specified in the commercial offer;
- Registration, insurance, and taxes: additional costs without which it is impossible to put the equipment into operation;
- Maintenance: scheduled maintenance, replacement of consumables, diagnostics, etc.;
- Repairs: unscheduled breakdowns, replacement of parts, work of service teams;
- Fuel and energy: fixed costs, especially sensitive to high volumes of work;
- Depreciation: loss of value of equipment over time;
- Downtime: losses associated with forced absence of operation;
- Storage and logistics: costs of moving, parking, and maintaining equipment outside of work.
Operating Costs: How to Estimate Them in Advance
To avoid unexpected expenses, you should estimate operating costs in advance. Start with how many hours per month the equipment will be in operation. This will allow you to predict the frequency of maintenance, the amount of fuel consumed, and the likelihood of replacing worn-out components.
Many manufacturers publish approximate data on operating costs, and they can be very useful. However, the most accurate picture will be given by calculations based on your specifics: work cycles, types of work, as well as seasonality, and operating conditions.
For example, scissor lifts, which are used indoors, require significantly less investment in maintenance than telehandlers, which operate in severe weather conditions on unstable ground. All this is important to take into account so that the actual cost of ownership does not end up being two or three times higher than expected.
Why Downtime Can Be Your Biggest Cost Item
When equipment is idle, you are losing potential profits. At the same time, you continue to pay for its maintenance, and if the downtime is due to a breakdown, you also pay for repairs. In some cases, you have to rent additional equipment to complete the planned tasks. As a result, the overall TCO increases sharply, even if the equipment itself is inexpensive.
A significant portion of downtime can be avoided if you choose a reliable supplier, organize timely maintenance, and ensure control over the equipment load. Monitoring the technical condition via telematics will help to identify problems in time and prevent emergencies.
How to Reduce TCO Without Compromising Efficiency
You can increase profitability even if you have already purchased equipment. It is enough to reconsider the approach to its operation. Here are some strategies that have proven their effectiveness:
- Scheduled maintenance will extend the service life and reduce the risk of breakdowns;
- Fuel consumption monitoring will reveal unnecessary costs and help implement more economical operating modes;
- Telematics and remote monitoring will help track the condition of equipment in real time;
- Choosing universal equipment will reduce the need for additional machines;
- Proper fleet loading will allow you to reduce the amount of idle equipment.
How Zuma Sales Can Help You Reduce Overall Costs
Zuma Sales helps customers choose equipment with the maximum return on investment. Our specialists will study your work tasks, offer solutions that best fit your schedule and operating conditions, and also suggest how to optimize the composition of the fleet.
You will receive equipment that will last longer, require less investment, and provide a stable result in any conditions. We also advise on residual value, resale, and logistics – all of which affect the total cost of ownership and help reduce it at the time of purchase.
Conclusion
Understanding and calculating the total cost of ownership of equipment is not just an accounting task. It is a strategic tool that allows you to control costs, increase the profitability of projects, and make smarter investment decisions. Given the rise in maintenance prices and stricter requirements for equipment, this approach will not only become useful, but necessary.
If you want to be sure that your fleet of equipment brings profit and not losses, contact the experts at Zuma Sales. We will help you select the optimal equipment and minimize TCO at all stages – from purchase to replacement.