Planning your yearly budget on anything is difficult. Trying to get the most of your machinery budget can be very tricky. Factoring in all costs for newer machines can eat it up in no time flat. However, there are ways to stretch your budget, even when it comes to large and expensive machinery. 

How is the Total Cost of Ownership Calculated for Machinery?

Total cost of ownership is usually determined by two main factors; operating costs and fixed costs. 

Operating Costs

The operating costs of machinery are what it actually costs to run the machines. This means all aspects of actually running the machines and the other costs around that. Factors like labor, electrical, consumables, maintenance, and repairs. However, repairs and maintenance can also fall under the category of a fixed cost. Labor, consumables, and maintenance of the machines can be calculated by the hour, the day, or the month. 

This will also depend on how often your machinery is used and what it is used for. A machine that is used daily will have a much higher operating cost as parts will wear out faster, it will consume more energy to run and the labor will also cost more. 

Fixed Costs

The fixed costs of machines are the costs that you pay regardless of whether the machines are used very much or not. These are often referred to as overhead costs such as lease or loan payment and don’t forget, the floorspace that machine consumes in your valuable plant. 

Cost to Purchase

Although the machinery in your plant is invaluable and can make tens of thousands daily, initially they can cost a lot of money. Whether you bought them outright, leased them as a rental payment, or traded in older machines for the newer one, it is still considered capital to buy the machines. If you borrowed money to buy the machines, the calculated interest cost should be at least large enough to cover the interest paid on the loan. 


This is what happens to any type of machine. Through regular use, and as it wears down and gets older the value of the machine lowers. These days, it doesn’t take long for a machine (really the controls) to become outdated with the speed that technology advances.

Taxes and Insurance

Machines take up space so you are paying for them to be housed, they need to be insured, and they cost you money in taxes, from the cost of the purchase to the taxes paid on the profits they make. 

Maintenance and Repairs

Most companies need to budget for these types of things. Machines will need repairs and replacement parts. Even regular maintenance is necessary. As machines get older and are in constant use, these costs will rise as more items will wear out or fail unexpectedly.

How to Maximize a Tight Machinery Budget 

Regular maintenance will help keep your machines running great. Don’t wait until they break down or the parts are completely ruined. Regular upkeep will preserve their life and save you money down the road for larger repairs or replacement while also allowing you to schedule downtime in between critical manufacturing schedules.

Also think about when purchasing machinery, whether new or used to lease the equipment as it can save your capital for other important needs. Also when buying new or newer equipment take the time to think about unloading your older equipment. Sell off those machines that are outdated or not being used. You can cut down the price on your next piece of equipment by selling off your older ones and free up more of that precious shop space. 

Make the Most of Your Machinery Budget by Partnering with SFMS

A great way to get the equipment you need is through financing. At Southern Fabricating Machinery Sales, we can help you finance your next purchase again, whether new or used. We have a myriad of finance solutions to help you get your equipment and can even return working capital (cash!) back to you for other needs such as internal plant improvements.

Southern Fabricating Machinery Sales has the capabilities to offer you great quality new and used machinery and match it with great financing providing you the best equipment for your needs and budget as well as the right financing for your long term goals.

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