May 6, 2008
What Drives TCO? Who Pays the Price?
Last time I discussed that drupa was coming up and commented on the announcement of new technology, pending the actual rollout of the new machines in Duesseldorf. After delving into these announcement a little further by reading a number of press releases, the comments on cost per impression and TCO continues to amaze me. Regardless of technology there are three cost components to consider, hardware, maintenance, and consumables. So with the big print fest just a few weeks away let's take a look at each.
Hardware
The obvious component is the print engine itself, but not so obvious are the options available for the chosen device, such as RIPS and pre- and post-processing units. Sales people have a funny habit of telling you only what you need to know to get the price point to where you want it. But depending on configuration, some machines come with certain extras for free, while others are optional. Make sure you completely understand the nitty gritty detail here. and make a point of asking about all the things you can add It's a little like buying a car. Some items are available individually while others only come as part of option packages. Knowing how this works can save you money while helping you get the total solution that is best for your operation.
Be sure you understand what is being quoted when delving into performance costs and monthly print volumes. Every manufacturer has their own way of measuring uptime, utilization and machine capacity, so be sure you have a clear understanding of how a vendor calculates these important measures. For example, Océ quotes its monthly machine capacity at 70% of how much could conceivably be printed. This provides a conservative number when planning for potential monthly print output and provides a buffer for peak volumes. While customers must ultimately decide for themselves, we believe our numbers are a realistic representation of the real-world machine capacity.
Now take it down a notch to look at uptime and utilization. Sometimes these different numbers are used interchangeably but they actually have specific definitions. Uptime is a function of machine availability, accounting for regular and preventive maintenance. Utilization is how much of that uptime the printer is actually used, based on the volume of work suitable for that device. This can vary due to operator skill, job complexity and job changeover.
When looking at these numbers, it is especially important to also consider pre and post devices, along with the software and platform necessary to run them. Think of all the things you need to be able to do, all the applications you may need to run, and think about how those affect your finishing requirements. Too often we find companies who need more finishing capabilities but find they only looked at one finishing option. At Océ we partner with multiple pre- and post- processing firms specifically so we can offer a wide range of options. But as the one who buys the equipment, be sure you put all your requirements on the table so we can help determine the optimal solution.
When you put the whole system together, look at finished throughput, not just uptime or print speed. You make your money from productivity--the number of finished, sellable documents you can produce and it's not always the fastest machine on the market that is the most productive. For example, suppose you are printing 100-page books for a customer that needs to be perfect bound with a full color cover. The pages are largely monochrome but include about 30 full-color pages that are either printed offset or from a digital press. On an Océ VarioPrint 6250 with an inline perfect binding system, books like this can be produced easily, with the color pages being interposed on-the-fly because the pre-printed color pages can bypass the imaging engine and be joined with the monochrome pages at full-rated speed of 250 duplex impressions per minute. A completed book can be produced about every 90 seconds.
Maintenance
On the maintenance side there are generally two components, a click charge and the base maintenance. The click is typically charged either by the impression (page) or by the linear foot for continuous feed printers. Base maintenances applies regardless whether you print or not. There are many variants to this from all-inclusive plans to a super click (combinations of equipment cost, consumables and monthly maintenance and usage charges) to volume plans, but there is always a charge for usage somewhere. Beware the person who says there is no click because the number is really just buried, either in the base unit price, in the lease or in the consumables!
Consumables
Here is the biggest area of discussion--and it can go on and on in different directions. Suppose I give you a price of 1 cent per impression and another company gives you a price of half a cent, which one would you buy? The answer is far from simple or obvious. The problem is, we can discuss all day the amount of coverage that appears to drive that figure and still not resolve the question. And it also varies by print engine, RIP and even the document composition software. For instance, did you know different software gives different coverage results? So when it comes to making a decision, there is no truly accurate way to measure it and see what the results are--until the machines are up and running your jobs in your shop. Ask vendors for averages and once installed you should be within 5-10% of estimates. And have them put the yields in writing and keep to their promises!
Tips
The most important piece of information I can give you is ask the basic questions and make sure that you collect it the same way and fill out your own TCO forms. Don't be afraid to ask the vendors for their TCO numbers and see how they work. Most of us know our competitors numbers, and can put those into any comparison. And don't forget to "sanity check" all your numbers. We have come across many errors or wrong assumptions in customer TCO models, so the closer you look at all the numbers the less likely you are to be surprised.