Tag: tco calculator

Maximizing Profitability for Rental Companies through the Total Cost of Ownership Metric

True total cost of ownership (TCO) is determined by factoring in everything that goes into operating that machine over its lifetime: initial purchase price, fuel costs, maintenance costs, utilization, organizational overhead, resale value, etc.

When you talk about total cost of ownership for rental companies, it has to play into their rental rate calculation as well as the return on investment, or return on asset, more so than just the purchase price of the machine. So if one brand has an advantage—and it may be something as simple as Brand A’s oil change interval is 500 hours, and Brand B’s is 2,000 hours—if you start extrapolating that over the duration of ownership, that starts to add up. Specifically for the rental side, all of those costs have to roll up into a profitable rental rate. Then you look at taxes and depreciation and retail value, auction value, things like that.

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