I’ve been thinking about buying a hydraulic wood splitter for years. One of the things I liked about the splitter I saw in the TV commercial was the simplicity of it. It had a wire mesh cover with a handle so I could just reach out and grab a handle to drag it around. It looked like a piece of furniture that would never break and was very affordable too. The only thing that bugged me about it was the price. I figured a hydraulic machine should cost at least twice as much as a cordless one.
I also figured I would have to make some kind of investment to offset the cost, or I wouldn’t get it done. So I started looking into ways to offset the cost of a new machine. Was there anything I could do? Should I showcase the product online and try earning more money off it? Should I look into creating Youtube content with it? I decided not to, because I realized I’d need to buy YouTube subscribers.
Should I look into building a machine? What about taking an existing machine and modifying it?
Lifetime Maintenance Cost
In looking into all of these different options I realized that a hydraulic splitter is not something that is going to change dramatically over time. For instance, if a manufacturer were to build a new model every five years, the lifetime maintenance cost for that splitter would be the same as the one I’m currently paying for. After some digging, I found that the manufacturers of heavy machinery tend to keep their equipment in good working order for the life of the machine. They don’t redesign it when it needs a makeover, they just retrofit it to continue to work well. There’s no reason why I shouldn’t be able to buy the same piece of equipment for two decades or longer.
The question became, can I use these assumptions to justify a lower cost? To figure out what my answer would be, I took a hard look at how much it would cost to operate each machine individually, not how much it would cost to operate a whole line of machines. The total cost of operation is a weighted average of the price of fuel, operating expenses, tax, warranty, labor, and other miscellaneous costs. The cost to operate a machine is a little higher for large wood splitters than it is for a small one because it takes more horsepower and mechanical power to split large pieces of wood.
Now, I could say that this is the price range where the owner of the is considering buying a hydraulic wood splitter that sells for 50,000. That would be a reasonable range, but it doesn’t take into account the cost to run the machine or maintain it. It also doesn’t take into account the added cost of parts and service, which can significantly increase the price.
Here’s another way to look at this example. Say the owner of the company that makes and sells the splitters figures that it will cost him 50,000 dollars to buy these splitters and install them. If he only buys fifty units and installs them in his plant, he will have to spend three million dollars to outfit his entire operation. He has to pay three million dollars to buy the equipment, service the machines, maintain them and then sell them if he wants to break even. In order to break even, he has to go through a whole host of potential difficulties and obstacles. This guy chose to buy fifty units instead of a hundred and this decision cost him money.
If the owner of a greenhouse and nursery is considering whether to buy a hydraulic wood splitter that sells for fifty thousand dollars and install it in his facility he might realize that he makes twenty thousand dollars profit each year on the sales of these machines. However, if he bought an eight hundred horsepower wood splitter that costs twenty thousand dollars he would realize a much higher margin. He can cut costs in other areas as well. His labor costs can be cut since he wouldn’t need to hire workers to do the menial work such as installing the machine and paying for their health insurance. He can also save on his utility bills since he won’t have to run the mowers and lawn mowers for his employees.
Since the owner of a greenhouse and nursery is considering whether to buy a steam-powered wood splitters machine or an electric one, the first question he should ask himself is how much power he will need. It is a fact that a steam-powered machine will make more profits but it will also require more repairs and upkeep. The owner of a greenhouse and nursery should not forget that the business will generate income from crops that he grows with his machine. If he doesn’t want to spend money on buying machines that will eventually depreciate in value, the cost-effectiveness of a steam-powered machine will work in his favor. Cost-effectiveness will work in his favor because a machine that is less expensive will also have a higher profit margin.