What goes into total cost of ownership
| Cost element | What to include | Where the number comes from |
|---|---|---|
| Purchase | Price, taxes, delivery | Quotation |
| Installation | Electrical work, stabiliser, ventilation, drainage | Electrician and supplier |
| Energy | kWh per day × 365 × tariff × years | Measured or tested kWh, your tariff |
| Planned maintenance | Service visits, condenser cleaning, gasket replacement | Service contract or estimate |
| Repairs | Likely parts and labour over the life | Supplier history, technician advice |
| Downtime and stock loss | Food discarded, lost sales during breakdowns | Your own records |
| End of life | Disposal, refrigerant recovery, resale value | Local recyclers and dealers |
Energy is usually the biggest line
For equipment that runs 24 hours a day, electricity over several years commonly exceeds the purchase price. A difference of one or two kWh per day between two models looks small on a spec sheet, but multiplied by 365 days and several years it becomes a real sum. That is why efficient components such as better insulation, EC fans, LED lighting and efficient compressors often justify a higher upfront price.
A worked comparison
Imagine two reach-in refrigerators for the same kitchen. Unit A uses 6 kWh per day; Unit B uses 4.5 kWh per day in the same conditions. Assume a tariff of ₹8 per kWh (an illustrative figure; use your own bill) and a seven-year life. The energy difference is 1.5 kWh × 365 × 7 × ₹8, which is about ₹30,660. If Unit B costs less than that much more to buy, and its service costs are similar, it is the cheaper unit to own.
How to compare quotations fairly
- Ask every supplier for measured energy use in kWh per 24 h, with the test standard and room temperature.
- Ask what is covered by warranty, for how long, and who honours it in your city.
- Ask for the cost of common spare parts: compressor, fan motors, controller, door gasket.
- Ask about the refrigerant; a low-GWP natural refrigerant avoids exposure to future price rises on high-GWP gases.
- Ask for the expected service interval and what a routine visit includes.
Simple payback: a quick sanity check
When one option costs more upfront but saves energy, simple payback tells you how long it takes to earn back the difference. Divide the extra purchase cost by the yearly saving in running cost. In the example above, the yearly energy saving is 1.5 × 365 × ₹8, about ₹4,380. If Unit B cost ₹15,000 more, payback would be about three and a half years; everything after that is saving.
Payback ignores the risk side, so use it alongside the other elements. A unit that pays back in three years but has no local service support may still be the wrong choice.
Keep records to improve the next decision
TCO gets more accurate with your own data. Note the purchase date, service visits, breakdowns, parts replaced, stock lost and, if possible, monthly energy readings for each major unit. After a few years you will know which equipment, suppliers and service partners actually cost least, and the next purchase decision becomes much easier.
Frequently asked questions
- How many years should I use for a TCO comparison?
- Use the period you realistically expect to keep the unit. Many businesses use five to ten years for commercial refrigeration. Use the same period for every option you compare.
- Should I include inflation in electricity prices?
- For a simple comparison, using today's tariff is fine because it treats all options equally. If tariffs are expected to rise, efficient equipment looks even better.
