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Factors That Influence Total Cost of Ownership

Blog Posts - Feb 18

Factors That Influence Total Cost of Ownership

JLG Industries, Inc.
World-leading access equipment manufacturer
McConnellsburg, PA

As a rental company owner or operator, you face difficult decisions as you invest in new equipment. You must assess your inventory and budget, determine the best product for your fleet needs and try to keep acquisition costs down. But, there are also costs to consider beyond your initial investment. These costs determine the total cost of ownership of a piece of equipment.

What is total cost of ownership?

Total cost of ownership (TCO) is the associated costs over the lifecycle of a machine. When making your equipment purchase decision, your initial investment is only part of the equation. Understanding TCO can help you look beyond the initial acquisition price to consider the value and profitability of your equipment and, ultimately, your bottom line.

What impacts total cost of ownership?

TCO includes anticipated costs, like insurance, tax and warranty, plus other expenses and divestments. As a rental equipment owner, you'll want to consider all the factors that can affect your bottom line, including:

  • Acquisition costs: The cost of getting machines into your fleet and ready for rental
  • Operational costs: Includes scheduled maintenance, service, unexpected repairs, parts and training
  • Resale value: The price someone will pay you when you eventually divest the machine
  • Machine reliability: More reliability provides maximum uptime, utilization and rental revenue
  • Machine versatility: More versatility promotes higher utilization and rental revenue

Your rental revenue depends largely on utilization and equipment uptime—an idle machine makes no money. Downtime from unexpected or too-frequent maintenance requirements minimizes utilization and cuts into your revenue. Plus, additional expenses from delays in service or obtaining the correct replacement parts add to the operating cost. When your equipment is reliable and delivers maximum uptime, you benefit from higher rental revenue and lower total cost of ownership.

How does a brand leader deliver low total cost of ownership?

Just as TCO should factor into your equipment investment choices, the customers' business needs and operating cost concerns should factor highly into a manufacturer's product design and development. A manufacturer should understand the big-picture impact of TCO and deliver advanced lifecycle solutions, from customer-focused R&D to single source parts.

Select manufacturers continually look to customers to identify unmet needs, then advance their products through innovation that improves productivity and profitability. Voice of the customer is used to find solutions that solve real job site problems.

Voice of the customer is used to find solutions that solve real job site problems.

Our machines are manufactured with similar parts, controls and designs for easier servicing and training. We use only the highest quality components, and each machine must pass rigorous factory testing to ensure it meets ANSI standards before leaving our facility.

But we don't stop at providing high-performance equipment. We also offer services after the sale that factor into lower TCO:

  • Over 80 regularly scheduled training courses
  • Tech center support for difficult part or repair issues
  • Three parts lines with expansive inventory, including parts for mixed-fleet repairs
  • Responsive mobile service that comes to your job site
  • Reconditioning program that restores boom lifts and telehandlers to like-new condition
  • A wide selection of certified preowned and used equipment for sale

Redesigned for lower TCO

The redesign of our telehandler line and the 400S and 450AJ boom lifts, is an example of how we take customer concerns into consideration when developing our equipment. Extensive customer input on operating costs helped drive the redesign of these products. Based on customer feedback, they were carefully reengineered with lower TCO in mind and now feature cost-saving upgrades.

  • Improved serviceability: 400S and 450AJ boom lifts have fewer components to maintain and offer better access to parts for diagnostics and repair
  • More uptime: Longer service intervals on JLG® telehandlers keep machines rental-ready
  • Greater durability: Diminished wear and tear from higher quality parts and fabrication

Want to hear from a real customer about how total cost of ownership factors impact his business? Watch our interview with Dave Robidoux, founder of West Coast Equipment, and Shaun Flanagan, president, to hear how JLG factors into their success.