What does Total Cost of Ownership for an air compressor mean?
Knowledge Center |
ELGi
We often read these acronyms when we read articles about screw compressors and machinery, but what exactly is TCO or Total Cost of Ownership? And why is it important?
The TCO or total cost of ownership is a concept that encompasses all the significant costs incurred by a screw compressor such as energy cost, maintenance cost and initial investment. In short, it is a short-term vision of all the costs and investments that will be necessary during the lifetime of the screw compressor.
Often, when a new screw compressor is needed for expansion or replacement, there is a budget with which to execute the investment. This budget normally only includes the initial investment for the purchase of the screw compressor but does not consider other long-term costs such as energy costs or maintenance of the screw compressor. However, these costs are very relevant during the operation of the equipment because they can account for a very high percentage of the life cycle cost of the screw air compressor.
Focusing on the energy cost, the efficiency of the screw compressor can be critical to reduce the total cost of ownership, since it accounts for around 75% of the TCO. The more efficient the machine, the lower the electricity consumption for the same flow, so screw compressors with similar flow rates can have significantly different energy consumption.
The initial investment is the most visible amount in the acquisition of a screw compressor, as it is the first expense that must be faced and usually represents only 10% of the total cost of ownership.
Not only efficiency and initial investment are important, but the screw compressor’s maintenance is also a high cost that can be up to 15% of the total cost of ownership. Therefore, when different proposals for compressed air are considered, it is interesting to have a budget including the amount of preventive maintenance of the screw compressor by an official service partner. In this way surprises are avoided, and the care of the screw air compressor is ensured for years to come.
The TCO will be a concept that will gradually become more widely known in the market, as it provides advantages such as cost transparency in the life time of the screw compressor and the simple visualisation of the economic differences that may exist between similar compressors from different manufacturers.
When a compressed air system is required, it is important to have an expert who can advise and assist in the definition of the complete system. Can we help you? Contact us at [email protected] .
