Direct answer
Total cost of ownership is the installed investment plus the operating and risk costs incurred over the chosen period, less any residual value. Include labour, product giveaway, packaging waste, utilities, consumables, planned maintenance, breakdowns, spare parts, changeover, cleaning and lost production.
Key takeaways
- Choose a realistic ownership period and production scenario.
- Separate fixed, variable and risk costs.
- Use actual production records and sensitivity analysis.
- Do not ignore changeover and downtime.
Define the requirement before comparing price
Use the expected product mix, hours, utilisation and growth rather than rated maximum output. Compare alternatives over the same period and state whether figures are cash cost, accounting cost or lost contribution.
- Set low, expected and high utilisation cases
- Use good packs rather than machine cycles
- Include ramp-up and planned shutdown
- State inflation, discounting and residual-value assumptions
Compare the complete installed solution
Fixed costs include purchase, installation and support contracts. Variable costs change with volume, such as labour, energy and consumables. Risk costs include unplanned downtime, obsolescence and product loss and should be based on evidence.
- Installed capital and finance cost
- Labour and supervision
- Waste, giveaway and consumables
- Maintenance, parts and technical support
Remove hidden cost and performance risk
A faster machine can have a higher cost per good pack if it is difficult to change, unreliable on the actual materials or expensive to support. Model availability, quality and performance rather than using nameplate speed.
- Value lost production only where demand exists
- Include control hardware obsolescence
- Check proprietary consumables and licences
- Avoid double-counting labour and capacity benefits
Ask for evidence before committing
Start with measured labour, waste, downtime and changeover. Where a new process has no history, use supplier evidence and run several scenarios. Update the model after commissioning.
- Current-state production and cost baseline
- Supplier maintenance and consumable schedule
- Availability and quality assumptions
- Annual review against actual ownership data
Comparison table
| Decision area | What to compare | Evidence to request |
|---|---|---|
| Application | Choose a realistic ownership period and production scenario. | Use actual production records and sensitivity analysis. |
| Performance | Separate fixed, variable and risk costs. | A sustained trial with good-pack counts |
| Ownership | Do not ignore changeover and downtime. | Itemised installation, spares and support scope |
| Acceptance | Use actual production records and sensitivity analysis. | Written FAT and SAT pass criteria |
Free working templates
Download these files and adapt them to the actual machine, product, site and acceptance plan.
Related buyer guides and tools
Relevant machinery and support routes
Use the guide to define the requirement, then compare the specialist routes below against representative product, packaging and output evidence.