Procurement Budget Structure: Decomposing Total Cost of Ownership
Why Purchase Price Alone Traps You
Real device cost spreads across five years of operation. Buyers who negotiate only the sticker price usually pay it back doubled through consumables and service (see handpieces and consumables).
The TCO Model
| Item | Typical 5-year share | Notes |
|---|---|---|
| Purchase | 40-60% | Unit + base handpiece set |
| Consumables | 15-30% | Cartridges, needles, lamps, filters (per volume) |
| Service and warranty | 8-15% | PM contracts, parts, visits |
| Training | 3-6% | Certification, onboarding, refreshers |
| Marketing and compliance | 3-8% | Program packaging, registration support |
| Opportunity cost | Extra | Downtime, floor space |
Practical Budgeting
- Model consumables by volume: get per-treatment consumable cost, multiply by expected annual volume.
- Price both warranty strategies: full coverage vs per-repair + in-house PM over five years.
- Reserve 10-15% for currency, parts inflation and surprises.
- Bundle consumables into the deal: lock pricing and escalators when your leverage peaks (see price comparison).
FAQ
How much is “free training” worth?
Basic onboarding is standard; the real value is advanced refreshers and complication training — worth more in the package than an extra handpiece.
Is financing a device reasonable?
Yes when stable gross margin covers installments with headroom — it is borrowing against future revenue, so model conservatively.