- Purchase Price is the Tip of the Iceberg
Purchase Price is the Tip of the Iceberg
Many companies never calculate what pest control or weed control spray equipment costs their company.
Many managers equate spray equipment cost with the purchase price. Unfortunately, purchase price is only one component of cost. Purchase price is only the tip of the iceberg. The majority of spray equipment cost is like the bulk of the iceberg – unseen, waiting to sink your company. Total equipment cost comprises the following costs:
- purchase price
- maintenance and repairs
Purchase price is the most obvious component of total cost. Unfortunately, it’s often the only cost considered in the purchase decision. Purchase price includes total purchase price of the base unit plus any optional equipment, sales tax and freight.
Installation cost includes the total cost of installing the equipment in the vehicle. Generally speaking, rigs requiring electric power will cost more to install. This equipment must be wired to the truck battery, which takes more time and requires wire, fuse, etc. Ask your rig vendor if electrical components are included in the purchase price. More complex sprayers, such as those with booms or electric or digital controls, will be more costly to install.
If installing the rig in-house, be sure to know what’s under the truck bed. Drilling through the bed into the gas tank adds significant cost. Note: This observation is based on personal experience.
Maintenance is planned and includes engine oil changes, pump rebuilds, spray gun rebuilds, etc. Maintenance costs include the cost of the components and labor. Regular maintenance will extend the life of a sprayer. Repairs are unplanned and involve repairing or replacing problem components. Consider these maintenance factors:
- Are replacement parts available?
- Is there good access to equipment to perform the service?
- Will the maintenance be done in-house or by a vendor?
- Is the maintenance easy, or are special skills or tools required?
Remember the aforementioned example involving the sprayer in the ATV with a broken engine pull cord. Because of the rig design, the pull cord couldn’t be replaced without first removing the skid from the ATV first. A 10-minute task became a one-hour job. Think about what this does to maintenance costs if you must remove the rig to do something easy like change the oil. Make sure equipment is designed for ease of maintenance.
Repair costs. Does the rig constantly break down? Repair cost includes not just the cost of the repair but the downtime that results and any appointments missed or cancelled. Are replacement parts readily available? Waiting for parts to be shipped in from the manufacturer can be a productivity killer.
Productivity impact. Does the equipment boost technician productivity or hinder it? Are key components properly situated for easy, safe, ergonomic access? Must a technician perform extra (wasted) motions just to do the job? This is the most important cost of a power sprayer because it affects the technician on every stop, every day. Wage expenses are the largest expense of most pest and weed control companies. For pest control companies with revenues of $150,000 to $25 million a year, wage expense ranges from 42 to 48 percent. (Source: NPMA 2010 Business Development Operating Ratio Survey, page 19). Anything the company can do to make a technician more efficient and effective has a direct bottom line impact. Hiring good techs, training them well, designing tight concentrated routes, having reliable spray equipment that supports or boosts technicians’ productivity are money makers.
Longevity/replacement cost. How long do the components last? Are high-quality components used? The following are examples.
One of the most expensive components of a sprayer is the gas engine. Some cost more than others, but the more expensive ones will provide years of uninterrupted service if they’re maintained properly. This isn’t an area in which to save a few dollars. The higher upfront cost is more than offset in reduced repairs and downtime and extended life.
Some of the cheapest components of a power sprayer are the plumbing fittings, yet these inexpensive parts can cost a bundle. A plastic fitting in the wrong place can be damaged easily, resulting in chemical spillage and lost productivity. Understand everything you’re getting when ordering a sprayer.
Here’s a final example from a large pest control company. The local office orders rigs from its national office, which buys in bulk to save money. The rigs are delivered to the local equipment shop, where techs make improvements and modifications requested by local management before installing the rig. The rig purchase is booked by national as a capital expenditure, and the extensive modifications are booked locally as repairs. The company doesn’t know the total cost of the equipment.
Don’t assume purchase price is the same as cost. As professional owners and managers, it’s critical to business success to understand total equipment costs. Learn where the icebergs lie.