When making a decision about what to buy for your company, most people believe that the acquisition cost is the only cost to consider. This common misconception could end up costing you a great deal of money in the long run. A generally accepted figure is that purchase price is only 30-50% of the total cost of ownership. The other components you must look at include Ownership costs and Post-Ownership costs. But first, we will examine acquisition costs.
Acquisition costs are basically all costs associated with "getting the equipment." This includes the purchase price, planning costs, taxes, financing costs, and quality costs.
Ownership costs include all expenses incurred for the equipment during its ongoing use. These expenses include: downtime costs, risk costs, cycle time costs, conversion costs, non-value added costs, and SC network costs.
Post-Ownership costs include environmental costs, warranty costs, product liability costs, and customer dissatisfaction costs.
In conclusion, when looking to purchase equipment or product for your organization, be sure to look at every cost involved in owning the equipment as well as costs incurred after you own it - it could save you more than you think.
