Loughborough

#17 – 21st April 2008

Whole-Life Costing

Too many of us, faced with a purchasing decision, will opt for the cheapest quote. That might be fine when we are shopping around for a particular brand of some commodity. On other occasions, there are often hidden costs over the life of an asset. If we take the time to understand these properly, we can often save a good deal of money over the extended period that we plan to keep something.
 
Understanding the whole-life cost of an item helps us to make informed decisions when purchasing. Presenting an accurate projection of whole-life costs when we are selling and ensuring that these are compared objectively with our competitors can be a real aid to successful selling.

Things to consider

Procurement costs	Do you need to write a requirements specification?How much time will you devote to research?
Capital	The headline cost that we always consider.
Installation	Some more expensive items we need for our business can prove much cheaper to install than equivalents that appear less expensive.
Disruption	Think about the time you will spend managing changes or without access to something on which you depend.
Interest	££££££££££
Insurance	Not just cars…..
Running expenditure	Consumables, all those fiddly bits they never tell you about.
Maintenance	Scheduled or not, it might be expensive.
Upgrades	Included or extra – check the small print. Especially with software.
Training	Time and money to consider.
Removal	Will it need specialist de-installing?
Disposal	Can you trade it in? WEEE is now an issue.
Expenses	For bespoke work and services, these can be extra.
Termination	Some service contracts have a termination penalty.
…………..	There is always something else.

When Buying

Request a statement of whole life costs for bespoke items. For expensive standard items like printers and cars ask about running costs. For services, read the small print and make sure that you understand all the likely costs. Get expenses capped. Negotiate termination clauses away. Think through the whole life of the product or service and understand all the implications. Collect the facts and use them in your decision.

When Selling

Make it easy for your prospect to understand the value that you are providing over the whole life of the relationship. Without knocking your competitors, make sure that your prospects have all the facts and data that they need. You will already have designed your Value Proposition to be compelling. Now you need to provide the right information so that there are no surprises.

WEEE

The Waste Electrical and Electronic Equipment Directive (WEEE Directive) is the European Community directive 2002/96/EC on waste electrical and electronic equipment which became European Law in February 2003.
The directive imposes the responsibility for the disposal of waste electrical and electronic equipment (WEEE) on manufacturers. Companies should establish an infrastructure for collecting WEEE, in such a way that "Users of electrical and electronic equipment from private households should be able to return WEEE at least free of charge" – retailers can still charge for collection though!

Paul Fileman MIET CEng MCIM
Chartered Marketer
paul.fileman@talktosps.com
Tel:  01509 854447
Mob: 07969 188820
www.talktosps.com