Generating long term savings – comparing products with TCO

Comparing digital displays – calculating true cost of ownership

For procurement professionals, AV / IT managers, and facilities teams, selecting equipment based solely on purchase price can lead to significantly higher operating costs over the life of an asset. Incorporating Total Cost of Ownership (TCO) into purchasing decisions gives a more accurate assessment of long term value by accounting for both the initial outlay - the capital expenditure - and the ongoing energy and management costs.

Finding energy consumption data

Sourcing the energy consumption to compare digital displays from a selection of manufacturers can, at first glance, feel like a time consuming headache. There are options to make life easier, though.

The European Product Registry for Energy Labelling (EPREL) provides energy consumption data for products on the EU market – an invaluable resource for procurement and life cycle cost analysis. The figures recorded use standardised data, so they offer a consistent base from which to compare the energy performance of products from different manufacturers.

Calculating TCO using energy consumption data

So how do you use energy consumption figures to calculate total cost of ownership? First, you will need to calculate the lifetime energy cost, multiplying the EPREL energy consumption of the display by the electricity tariff and by the expected amount of time (the lifetime) you will have the product in service:

• EPREL energy consumption × electricity tariff × expected product lifetime = Lifetime energy cost

Using this figure, the total cost of ownership can be calculated by adding the purchase price with the lifetime energy cost:

• Purchase price + Lifetime energy cost = Total cost of ownership

The energy consumption values for digital signage on EPREL show the kWh per 1000 hours (kWh/1000h) for out of the box settings and operation. There are 8,760 hours in a year. So, for a 24/7 display it can be easiest to calculate the lifetime energy consumption with the following model:

• /(kWh/1000h x 8.76) x electricity tariff x expected product lifetime = Lifetime energy cost

Generating long term savings – comparing products with TCO

A working example of how researching total cost of ownership can support long term savings for businesses can be shown when comparing similarly specified 50” 24/7 signage displays from two different manufacturers.

Display A using 58kWh/1000

• 58kWh x 8.76 = 508.08kWh

Using a €0.24/kWh electricity tariff and an expected lifetime of 6 years.

• 508.08 x €0.24 x 6 = €731.64 lifetime energy cost.

Assuming a RRP of €1,100 the total cost of ownership is €1,831.64.

Display B using 123kWh/1000

• 123kWh x 8.76 = 1077.48kWh

Using a €0.24/kWh electricity tariff and an expected lifetime of 6 years.

• 1077.48 x €0.24 x 6 = €1,551.57 lifetime energy cost.

Assuming a RRP of €749 the total cost of ownership is €2,300.57.

So, although display B has a purchase price that is €351 lower, its higher energy consumption increases lifetime operating costs by over €819, resulting in a total cost of ownership that is over €468 higher than display brand A.

That’s a display lifetime saving of €468 for a single unit. For a fleet, the cost savings of selecting display A are substantial.

Supporting joined up procurement decisions

Using consistent energy consumption data within procurement evaluations enables organisations to move beyond lowest cost purchasing and adopt a lifecycle cost approach that is transparent, and evidence based, supporting:

• More accurate capital investment decision making.

• Reduced operating expenditure through lower energy consumption.

• Improved business sustainability.

For businesses with large display fleets, even relatively small differences in annual energy consumption can translate into substantial savings over the lifetime of those displays.

Incorporating energy data into TCO models helps procurement teams identify products that deliver the lowest lifetime cost rather than the lowest acquisition cost, leading to more financially and environmentally sustainable technology investment decisions.

Discover the Philips Signage line up – delivering lower cost of ownership for business.