Everybody loves a bargain. Whether trying to save a few dollars on office supplies or a few thousand on equipment upgrades, keeping an eye on the company’s bottom line is not just good for business – it’s good for you. And by that we mean it makes you look like a rock star in the eyes of your boss and the penny-pinching folks in finance. So it’s completely understandable why you might be drawn to the low, low price of a consumer-grade or refurbished computer.
But before you stick a feather in your cap for purchasing a $400 used laptop instead of forking over the $900 or more it would probably have cost to get a shiny new one, you need to understand the real cost of inexpensive equipment. At MIS Solutions, we not only are here to offer IT support when something goes awry. We’re also here to guide our clients when making equipment-buying decisions, which means helping them understand what seems like a good deal might end up costing them dearly down the road.
Sure, on the surface it appears that you just saved your company $500. Yay you! But did you really? We’re gonna go with “No. No you didn’t.” And we can show you why. First of all, “refurbished” is just a nice way of saying “used.” And a used computer is, well, a used computer. Likewise, consumer-grade computers are designed for home users -- not small and medium sized businesses that demand more from their technology -- and they have a shorter life expectancy (about two years) than business-grade hardware.
Business-grade computers and laptops have a 42-month mean time between failure (MTBF) – which is the standard that most manufacturers say certain hardware (like a computer) should last before it becomes problematic. Some might not make it to 42 months while others might run well beyond that time frame. The point is, this is how long computer manufacturers expect their equipment to perform properly.
Let’s look at it from a different perspective and compare the true cost of buying used or cheap equipment to the cost of purchasing new professional grade computers. No matter the cost of your “new” computer, you’re still looking at an install charge of about $250.
“That’s still a better deal,” you’re saying to yourself. But because your “new” older computer probably doesn’t have the latest operating system, you’re going to have to part with some cash to have that installed. After all, you cannot operate outdated assets because of security issues – but that’s another story.Ok, but you’re still ahead by $400, right? Nope. The next thing you need to consider is the monthly total cost of ownership (TCO). Over the 42-month MTBF lifespan of the brand new, shiny, out-of-the-box computer, you can expect the cost to be about $27.38 per month ($1,150 /42 = $27.38).
Now let’s pretend that you’ve got six to 12 months of MTBF left on your refurbished machine. Splitting it down the middle and hoping there’s still 9 months of life left, that cost comes out to $83.33 ($750/9 = $83.33). As you can see, the cost of this computer you thought was a great deal is already costing you $55.95 a month more than a new computer.Now consider this: because your used computer’s lifespan is going to be drastically shorter than a new one, you will have to replace that computer two more times during the 42 months that the new one is expected to still be operating smoothly. Provided you purchase two more bargain-basement computers at $400, you’ll be spending $1,200 during the next 42 months for equipment for just one user. But wait! There’s more! Don’t forget about the two more installs and operating system upgrades. Cha-ching!In a matter of three and a half years, you’ve already spent twice as much on computers than you would have had you bought a quality, new computer in the first place.
Aside from the obvious costs for the equipment and installs, you also have to factor in the costs of downtime for your employee. What is it costing your business to have just one employee out of commission during the two-hour install? Keep in mind that you’ll need to purchase two additional computers during this same 42-month period meaning they’ll be idle an additional four hours.
What does it really cost your business when an employee is twiddling their thumbs waiting for the install? You have to figure in the cost of overhead and also the cost of profit lost during that two-hour period. Assuming the average wage of your employee is $15 an hour, you can calculate that with overhead (an additional $15) and profit lost (another $15), the cost to you is $45/hour or $90 per two-hour install. But remember, this one refurbished computer will need to be replaced two more times during the 42-month period. So now you’re looking at $270 ($90 x 3).
Hopefully by now, you’re getting a clearer picture of how expensive low-cost, used equipment can be in the long run. These figures only take into account one user. Imagine if you decided to purchase 10, 20 or even more used computers for your business. You can do the math yourself, but the evidence is compelling – saving a few hundred dollars upfront will inevitably cost you dearly down the road.