Total Cost of Ownership

Set the period and the cost categories

Total cost of ownership is easiest to get right when it follows a recognised method. IEC 60300-3-3:2017, the international guide to life cycle costing, covers costs across an item's whole life, from acquisition through operation and maintenance to disposal, with particular attention to how dependability drives those costs. Borrow that structure. Fix the period you will assess, normally the time you expect to keep the robot, and the usage you expect, in hours or tasks per year. Then set up cost categories for purchase and installation, running costs, service and downtime, staff time, and end of life. Use the same categories for every robot you compare, so the differences reflect the machines rather than the spreadsheet.

Energy, consumables and software subscriptions

Running costs are where cheap robots and dear ones can swap places. For energy, multiply the robot's average power draw, including charging losses and standby, by its working hours and your electricity tariff, and ask the maker for measured figures rather than battery capacity alone. List consumables next: brushes, filters, pads, squeegees, gripper fingers, tyres, detergent or cutting blades, each with its replacement interval and price. Then add software, which is easy to miss. Fleet management licences, cloud mapping, remote monitoring, app subscriptions and connectivity charges are often billed monthly or per robot. Mark the ones the robot cannot work without, because those fees continue for as long as you own it.

Service, downtime and the people around it

Service costs come in two forms: what you pay the maker or a service partner, and what you lose while the robot is down. Price the maintenance contract or the expected call-out charges, scheduled part replacements such as batteries, and any recalibration visits. Then estimate downtime by multiplying the hours a robot is likely to be out of action each year by the value of the work it would have done in that time, or by the cost of covering that work by hand. Add staff time for supervision, clearing faults, cleaning and training, because these hours rarely appear on any invoice. A robot that needs frequent help can cost far more to run than its price suggests.

Resale value, useful life and disposal

The last part of the calculation is what the robot is worth when you stop using it. IAS 16 Property, Plant and Equipment defines residual value as the amount you would currently get from disposing of an asset, after disposal costs, if it were already of the age and condition expected at the end of its useful life, and requires both figures to be reviewed at least at each financial year-end. Among the factors it lists for useful life are expected usage, physical wear and tear, and technical or commercial obsolescence. For robots, obsolescence can arrive when software support ends rather than when parts wear out. Subtract the expected resale value, then add the cost of data wiping, battery recycling and collection.

Sources and further reading

• IEC 60300-3-3:2017 Dependability management, Part 3-3: Application guide, Life cycle costing — International Electrotechnical Commission.
  International guidance on life cycle costing, from acquisition through operation and maintenance to disposal.
• IAS 16 Property, Plant and Equipment — IFRS Foundation.
  Defines useful life and residual value, and lists the factors, such as obsolescence, used to estimate them.

Common questions

How do you calculate the total cost of ownership of a robot?

Add the purchase and installation price to every running, service, downtime and staff cost over the period you plan to keep the robot, subtract its expected resale value and add disposal costs. Dividing that total by working hours or tasks completed lets you compare robots on cost per hour.

What is the difference between TCO and ROI for a robot?

Total cost of ownership counts what a robot costs you over its life. Return on investment compares those costs with the gains, such as labour hours saved or extra output, to show whether and when the robot pays back. You need a sound TCO before any ROI figure means much.