Why the Fuss Over Total Cost of Ownership?
Total Cost of Ownership (TCO) is important not only for big companies making a strategic purchase of some product or service but also important for individual consumers trying to figure out what to buy ... and yes, I believe it is valuable when considering which type of vacuum cleaner to buy.
The concept of TCO is quite simple and should be applied to any important purchase decision. It is simply the sum of the direct costs (the costs to make an acquisition or how much you pay to buy an item) and the indirect costs (how much you pay to keep operating something). A simple example is with the purchase of a car (I assume that you pay for it all at once here for simplicity). The purchase price is the direct cost. If you paid $20, 000 for a used car, then this would be a majority of your direct costs. I've listed below some typical operating costs for a car:
- Gasoline: $80/ week
- Oil Change: $30/ 3 months
- Insurance: $1500/ year
- Maintenance: $100/ yr (average expense over the life of the car)
- license and registration fees: $100/yr
- Parking Fees: $250/ year
- Tires: $500/5 yrs (with alignment and balancing)
You can see that your cost to make the purchase (direct costs) was $20, 000, but your ongoing operating costs (indirect costs) is roughly $6500 per year. Over a five year period, that comes out to about $32,500 in indirect costs. This number is greater than the purchase price of your used car! A similar economics applies in the deciding which vacuum cleaner to buy.
The Economics of Vacuum Cleaners
Marketing experts have mastered the art of using "Jedi mind tricks" to convince users to make shopping decisions that don't add up when you do some basic arithmetic. Many consumers will simply look at the direct costs (this is what you pay to buy an item) and not factor in the long-term consumable or operating costs when making a purchase decision. The selection of vacuum cleaners in the United States has been distorted by such marketing tactics. I am not only a huge fan of the Dyson because it makes engineering sense but also because it makes sense financially. When you look at the total cost of ownership (ignoring enjoyment and efficiency gains for now), I really do believe that the Dyson is the cheapest vacuum cleaner you can buy. Below, I've created a chart that shows the Point-of-Purchase cost (or direct cost) and the recurring consumable costs (a portion of the operational costs) for a typical Hoover upright vacuum cleaner and a Dyson vacuum cleaner under various usage scenarios.Credit: BananaYellow
The Dyson DC25 costs about twice as much as a similar Hoover upright; but when you look at typical expenses over a five-year period, it becomes clear that the Dyson is indeed the cheapest vacuum cleaner you can buy. The red portion of the bar shows the consumable costs (the vacuum bag) and the blue portion shows the Point-of Purchase costs (the vacuum cleaner). The two columns on the left assume the use of a standard 9-pack of vacuum bags swapped out at two different intervals, and the third column is for special HEPA filter bags used by allergy sufferers.
If you are an allergy sufferer, the Dyson is the cheapest vacuum you can buy. You pay once for a vacuum cleaner that consistently works well. That alone is worth the additional money you pay up- front. Even conventional bagless vacuums use a pleated filter to remove the fine particles. The result is that you spend additional money replacing these more expensive filters and have the same issue with expelling fine particles into the ambient air.
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