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Cost or Investment ?
Posted by Jim Hammill
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Cost or Investment ? October 14, 2003 02:13AM |
Registered: 17 years ago Posts: 751 |
<HTML>As I am currently in the planning stages of setting up on my own, I have been giving a lot of thought on this and though I'd share with you.
When purchasing new equipment how often do we look at the price as a cost or as an investment? I'd guess we'd all say 'cost'. Over the last few months I have been asking myself the same question's many times. "Can I afford this ", " is this a good as deal as it looks”, or "I have to buy that, the price is too good to miss". We are all swayed at times by super low bargain prices. Equally, we are sometimes put off by high price for a brand name. I have to admit; I fall for this too often. Then I started taking a closer look, trying to decide if it was a cost or an investment.
Here are some examples.
Extractors. I have seen these range in price from around $650 up to $2500. Being under funded in the cash dept myself I looked straight at the cheapest price. I didn’t buy one just yet, I could probably get the $650 at a stretch, and it would be a low cost, but would it be a good investment? Just how durable is this thing at that price? How many times is it going to break down on me? How long before I have to replace this thing? If there is that much difference in price than there has to be an equal size difference in quality. In our shop our extractor runs almost all day, and it does take some punishment. I believe we paid around $2000 for it, but it works every day without fail, has never broken down, and in it's time, I would say it's been used on about 3000 vehicles. So while it may have been a high cost, it's also been an excellent investment. I'm willing to bet that some of these cheaper extractors (not all) simply would not have been able to keep up with the pace. The extra investment was worth it as we have never lost a days work through not having our extractor available.
Buying chemicals in bulk.
Quite a few of our vendors like to push this " buy a 55 gallon barrel and we can really give you a good price". This is fine for high volume car washes etc. For example, in our wash rack we were getting through a barrel a month in car wash concentrate. Some of our detailing chemicals come in 5 gallon barrels, Carpet Extractor, Vinyl Dressing, Engine Degreaser, All Purpose Cleaner. These are sometimes a good way to get a lower price on a product. One thing to remember is that while you may be saving money in the long run by getting a lower price, you will actually be paying out a higher initial cost than you would normally. Take care to make sure that this is a product you will use quickly, because you have to pay for the chemicals up front. So if you buy enough to last you 6 months, the money in effect is sitting on your shelf instead of in your bank account. At our place they hate high inventory levels, it's in some ways large amounts of cash lying around. Many of the Auto manufacturers have this down to a fine art, having just enough inventories on hand to make the vehicles they need to. Many years ago when Ford had a sudden walk out at one of their engine plants, they ran out of engines about 2 hours later and had to halt one of their production lines. Simply, a large inventory of products is a big drain on your bank account.
Low cost equipment.
We have all seen the buffers online and in some auto stores for 50 or 60 bucks. I even bought one to use at home. While this was a low cost, it was a poor investment. It works really well, for the weekend buffer or part time user. I thought about it afterwards and actually regretted buying it. I paid $60 for it and now wish I had just saved the money and out it towards a pro buffer, like a DeWalt or Makita etc. Something that is designed for heavy-duty use. Again, with four detailers at our place our buffers are sometimes running 6-8 hours a day. The DeWalt we have has been an excellent investment because we have had almost trouble free use with it despite its higher initial cost.
See a pattern here??
It's hard to do, even more so on a low budget, but look beyond the price, really check it out and see if you just bought a bargain or a poor investment.
Jim.</HTML>
When purchasing new equipment how often do we look at the price as a cost or as an investment? I'd guess we'd all say 'cost'. Over the last few months I have been asking myself the same question's many times. "Can I afford this ", " is this a good as deal as it looks”, or "I have to buy that, the price is too good to miss". We are all swayed at times by super low bargain prices. Equally, we are sometimes put off by high price for a brand name. I have to admit; I fall for this too often. Then I started taking a closer look, trying to decide if it was a cost or an investment.
Here are some examples.
Extractors. I have seen these range in price from around $650 up to $2500. Being under funded in the cash dept myself I looked straight at the cheapest price. I didn’t buy one just yet, I could probably get the $650 at a stretch, and it would be a low cost, but would it be a good investment? Just how durable is this thing at that price? How many times is it going to break down on me? How long before I have to replace this thing? If there is that much difference in price than there has to be an equal size difference in quality. In our shop our extractor runs almost all day, and it does take some punishment. I believe we paid around $2000 for it, but it works every day without fail, has never broken down, and in it's time, I would say it's been used on about 3000 vehicles. So while it may have been a high cost, it's also been an excellent investment. I'm willing to bet that some of these cheaper extractors (not all) simply would not have been able to keep up with the pace. The extra investment was worth it as we have never lost a days work through not having our extractor available.
Buying chemicals in bulk.
Quite a few of our vendors like to push this " buy a 55 gallon barrel and we can really give you a good price". This is fine for high volume car washes etc. For example, in our wash rack we were getting through a barrel a month in car wash concentrate. Some of our detailing chemicals come in 5 gallon barrels, Carpet Extractor, Vinyl Dressing, Engine Degreaser, All Purpose Cleaner. These are sometimes a good way to get a lower price on a product. One thing to remember is that while you may be saving money in the long run by getting a lower price, you will actually be paying out a higher initial cost than you would normally. Take care to make sure that this is a product you will use quickly, because you have to pay for the chemicals up front. So if you buy enough to last you 6 months, the money in effect is sitting on your shelf instead of in your bank account. At our place they hate high inventory levels, it's in some ways large amounts of cash lying around. Many of the Auto manufacturers have this down to a fine art, having just enough inventories on hand to make the vehicles they need to. Many years ago when Ford had a sudden walk out at one of their engine plants, they ran out of engines about 2 hours later and had to halt one of their production lines. Simply, a large inventory of products is a big drain on your bank account.
Low cost equipment.
We have all seen the buffers online and in some auto stores for 50 or 60 bucks. I even bought one to use at home. While this was a low cost, it was a poor investment. It works really well, for the weekend buffer or part time user. I thought about it afterwards and actually regretted buying it. I paid $60 for it and now wish I had just saved the money and out it towards a pro buffer, like a DeWalt or Makita etc. Something that is designed for heavy-duty use. Again, with four detailers at our place our buffers are sometimes running 6-8 hours a day. The DeWalt we have has been an excellent investment because we have had almost trouble free use with it despite its higher initial cost.
See a pattern here??
It's hard to do, even more so on a low budget, but look beyond the price, really check it out and see if you just bought a bargain or a poor investment.
Jim.</HTML>
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Re: Cost or Investment ? October 14, 2003 04:16AM |
Registered: 17 years ago Posts: 866 |
<HTML>When I started out I knew it was important to start out with good equipment. I couldn't afford new stuff then so I bought high quality used equipment. I slowly replaced it all with new equipment as my biz grew.
Two years ago I bought a mytee 1007 extractor. It was the most powerful one I could buy that my generator could handle. It cost me $1500. In the past two years that machine has worked perfectly and has made me over $25,000 -$30,000.</HTML>
-----------------------------------------------------
Plays in the rain --- www.SuperiorShineDetailing.com
Two years ago I bought a mytee 1007 extractor. It was the most powerful one I could buy that my generator could handle. It cost me $1500. In the past two years that machine has worked perfectly and has made me over $25,000 -$30,000.</HTML>
-----------------------------------------------------
Plays in the rain --- www.SuperiorShineDetailing.com
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