Drilling Deeper: Beyond The Purchase Price

September 2013, Vol. 68 No. 9

Among the most important factors that influence decisions to purchase one product over another is cost. Yet all too often, especially in the world of construction equipment, buyers neglect to look past price and dig deeper to uncover the not-so-obvious ongoing intangible expenses. Such is the case for many trenchless contractors as they navigate their way through the process of acquiring a new horizontal directional drill.

“There’s a lot more that plays into the equation than simply the purchase price,” says Chad Van Soelen, business manager; underground products for Vermeer. “Even though you may buy a less expensive rig up front, if that drill costs you more on a day-to-day basis it may be more expensive over the course of the drill’s lifespan.

“Taking into account cost of operation is a more accurate representation of what the investment will be long-term. Obviously, there will be expenses to operate the drill daily, so looking solely at purchase price isn’t always a true reflection of what you’re actually paying.”

Another factor that comes into play is individual predispositions about price and value. Assuming features, capabilities and options among models being considered for purchase are comparable, for some individuals, the higher-priced model will likely represent better quality and craftsmanship. For others, however, the higher cost can be detrimental due to budget constraints or a price-shopping mentality.

Cost of ownership vs. cost of operation
According to Van Soelen, consideration for what will be required to keep the drill operating efficiently and in good condition for the lifespan of the drill will provide a more accurate reflection of actual cost. Things like parts, service and maintenance costs, and proximity to a local dealer, all play a role.

For calculation purposes, distinguishing between cost of ownership and cost of operation is important. Cost of ownership includes dollars spent to purchase the drill, minus trade in allowances or proceeds from private sale of used equipment. Cost of operation, on the other hand, may include day-to-day operational expenses including maintenance, repairs – even tooling to some degree. Things like drilling supplies can also play a role.

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“At the time you’re buying a new drill, specifics like drill rod life and wear part pricing may not be foremost in your purchase decision,” says Van Soelen. “However, these things add up significantly and can be a major factor in your daily cost equation.”