From customer-built transformers to everyday office printers, every piece of business equipment has a hidden cost: the lifecycle cost. This is the initial sticker price plus the expenses incurred throughout the equipment’s entire lifespan. And understanding these lifecycle costs is important for making informed business decisions. 

Here are 3 helpful tips.  

Total Cost of Ownership (TCO)

Knowing the TCO means you have a clear picture of what the equipment will really cost you over its lifespan, beyond just the sticker price. This understanding helps prevent budget overruns and ensures you’re prepared for all related expenses.

You want to tally up every expense related to the equipment including:

  • Initial purchase price
  • Installation costs
  • Operational costs
  • Maintenance and repair
  • Training costs
  • Software updates/upgrades

Suppose you want to buy a new commercial printer. The TCO would include the cost of the printer, plus ongoing expenses like ink, paper, maintenance kits, and potential software updates. You may also need to consider the cost of training your staff to use it effectively.

Depreciation and Resale Value

Figuring out how much your equipment will depreciate helps you understand how much it’s worth over time and when you might want to replace it. This means you can plan financially for its eventual phase-out.


  • Determine how quickly the equipment loses value, using methods like straight-line or double-declining balance depreciation
  • Look at the prices of similar used equipment or consult with industry experts to gauge what you could realistically get if you sold the equipment later

Say you’re eyeing a delivery van for your business. By checking depreciation rates and resale values, you could find out that the van will lose about 15% of its value each year and could be sold for about 20% of its original cost after six years.

Performance and Efficiency

Assessing the performance and efficiency of equipment ensures it meets your operational needs and doesn’t become a financial drain due to poor use or frequent breakdowns.


  • Review equipment specs. Understand important features like capacity, speed, and energy efficiency
  • Compare different models. Look at various options to see which offers the best mix of upfront cost and long-term savings
  • Consider the impact on productivity. Think about how the equipment’s performance will affect your operations. Will it speed things up, reduce downtime, and ultimately save money?

Say you’re shopping for a new industrial freezer for your restaurant. You find one that, although pricier, is more energy-efficient and has better storage capabilities. This model might cost more initially, but it’ll save on energy bills and enhance your operations, making it a smarter buy in the long run.

In essence, when you want to buy business equipment, it’s essential to think beyond the here and now. By tackling these questions, you ensure you make investments that truly benefit your business.

By Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to [email protected].