We’re all faced with hundreds of decisions to make on a daily basis and most of them are fairly easy – or else certainly have limited effect on your life if you make a wrong one. However, there are decisions that you’ll have to make regarding the purchase of equipment for your facility that may have major consequences if you select unwisely. There’s nothing worse than buying a piece of equipment and hoping against hope that it will perform well, only to have your worst fears confirmed when it does not live up to your expectations.
The problem with these types of decisions is that we tend to make them emotionally rather than in any scientific fashion. Decisions are often based on “gut feel” or the persuasiveness of the salesperson, or impulse. The next morning you get up and already begin to get “buyer’s remorse” – a horrible feeling for you as well as for the salesperson that you’ve just dealt with, if you even bother to share it with her. We’ve all had this feeling, wondering whether the costs justify the benefits and whether the equipment will suit our needs.
It’s easy to feel this way especially when you have little information about the background of the product. Most of us aren’t biotechnicians or engineers, so knowing whether a product will perform the way it is purported to, or how it stacks up against competing products, can be a blur of information that may all become meaningless. Every salesperson wants to put the best face of their product first and downplay any negatives, whether they’re real or imagined.
It’s better to use a scientific basis to help you come to a conclusion, and I would submit that a lifecycle cost study is one way to ensure that your emotional evaluation was on target. This procedure will reassure you that you’ve given this some thought; utilized tangible evidence; asked some quantifiable questions, and that you’ve not simply made an emotional investment in a product.
You’ve probably at least heard of a lifecycle cost study before, but had never actually given it a try. It sounds as though it’s something a number-cruncher should do instead of the average consumer. As a manufacturer, we thought that as well, until about 15 years ago, when we were contacted by Johnson & Johnson. They advised us that they had done a lifecycle cost study of our product, along with several others, and come to the conclusion that ours was the one they felt had the best lifecycle cost among our competitors. That quickly made us sit up and take notice of the value of this method of evaluation.
It’s not as hard as you might think to do one of these brief studies yourself. You just need a few facts from the manufacturer and, if necessary, a few qualification questions from some outside partners. Here’s the formula in brief:
1. Annualized Product Cost equals the total installed and delivered cost divided by the number of years of expected life.
2. Annualized Weekly Maintenance Cost equals the weekly maintenance cost in man hours per year multiplied by the cost of one man hour.
3. Annualized Periodic Maintenance Cost equals the periodic maintenance cost in man hours per year multiplied by the cost of the procedure.
4. The Total Cost of the Product per Year equals the Annualized Product Cost added to the Annualized Weekly Maintenance Cost and the Annualized Periodic Cost.
Still too daunting? Let’s take an example and that perhaps will make it easier. Let’s say you’re looking at a rubber floor. The product costs $3,000, has a useable life 10 years, needs to be damp-mopped once a week and you’d like to have someone come in and clean it with a scrubber the end of every year. The cost of labor mop the floor is $12 per hour, and it takes about an hour per mopping. The annual scrubbing costs you $500 per trip. (See Figure #1 for how that scenario would break out.)
Now you might see how this stacks up against some of your other options, such as carpet, which typically requires more maintenance and won’t last as long rubber.
You can also do all this with virtually any type of equipment purchase. The salesperson should be able to give you the yearly maintenance costs of various types of machinery, as well as whether the machine will need a periodic overhaul – questions you likely wouldn’t have asked if you weren’t willing to go through this exercise. Yet, questions that you’d probably like to know the answers to before you find out through actual experience. Even if you don’t actually take pen to paper, it still gives you some thoughts about costs down the road that you might not have thought of before.
Steve Chase is the General Manager of Fitness Flooring. He can be contacted at 866.735.5113, or by email at sales@fitnessfloors.com, or visit www.fitnessfloors.com.
