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How to Calculate the Total Cost of Ownership for Your Retail Mobility Devices

How to calculate retail TCO

Mobility has rapidly become a necessity for retail stores. As customer expectations change and the need for accurate inventory counts increases, wireless and mobile technologies have emerged as a key competitive differentiator for brick-and-mortar retailers.

A number of factors have converged to drive adoption of mobile devices in retail:

  • Customers demand on-the-spot, in-person service. Associates need real-time information about price and product availability.
  • Accurate inventory counts are essential, especially if you fulfill online orders from the store.
  • Communication among your team is essential for efficiency and the ability to deliver excellent customer service.

When it comes time to deploy a new mobile computer or upgrade an existing deployment, how do you know whether the investment you are making is the best value? You have to evaluate the total cost of ownership (TCO) of the new devices you are considering.

Do the Math

Calculating a correct TCO will allow you to more accurately select the most cost-effective device for your application. Remember, the lower the total cost of ownership, the faster you can achieve a return on investment (ROI).

TCO is more than just the purchase price of the system — in fact, research firm VDC estimates that hard costs account for only 10% of TCO over five years. While rugged, enterprise-class mobile devices may have a higher sticker price, low-cost consumer devices often have a higher failure rate or may not be able to efficiently handle your application needs. The TCO for those devices is often higher than for a rugged device.

Be sure you take the following factors into account for a more accurate TCO calculation:

Hardware Costs: These include all of your hardware (computers, wireless access points), as well as the purchase price of your mobile software. You may also need to purchase peripherals such as mobile printers, industrial-grade barcode scanners, card readers/EMV chip readers, and other items. Enterprise-class mobile computers typically have a number of these peripherals available; consumer-grade mobile devices (like smart phones) often do not.

Replacement Costs: Replacement cost or the cost to maintain a spares pool also contributes to TCO. Devices that aren’t designed for use in your environment may be more likely to fail or become damaged, resulting in higher replacement/repair costs over the long term. Ask your solution provider about failure rates, and use that information to project those costs. Consumer devices may also become obsolete or may not be supported as long as enterprise devices, resulting in more frequent hardware refresh cycles.

Don’t Forget Soft Costs

Soft costs are more difficult to quantify, but you can project potential costs based on the typical failure/replacement rate of the hardware and your own internal costs. Each time a mobile device fails, it can lead to costly down time and opportunity loss. If the mobile device doesn’t have sufficient processing power or an enterprise-class scanner, it could bog down operations and degrade productivity. For scan-heavy operations (like inventory or receiving), phone or iPad scanners simply decode too slowly to be useful in a retail environment.

Devices that require frequent updating or troubleshooting also increase IT support costs. This is where the use of rugged or enterprise-class devices can positively affect TCO. Because these devices require less support, offer longer battery life, and are designed for robust security, they can greatly reduce future support and maintenance costs.

Rugged devices are built on more stable operating platforms. Consumer device operating systems are upgraded frequently, which can lead to application compatibility issues and other problems.

Finally, modern rugged devices can also reduce training costs and boost productivity. These mobile computers boast the same easy-to-use interfaces as their consumer counterparts, and are available in a variety of form factors (phone, tablet, etc.) that make them more ergonomic and ideal for mobile point-of-sale, assisted shopping, and other consumer-facing applications.

First Impressions Can Be Deceiving

So while the cost of a consumer device may be lower, TCO for those mobile computers is usually higher — one VDC estimate put the average TCO of a consumer handheld at roughly $4,000, compared to $2,700 for a rugged handheld.

Sometimes, the more rugged devices are called “purpose-built” devices.  The purpose is obvious:  design specifically for the operations in your retail, warehouse or other environments.

Before you buy contact us at Quest Solution, conduct a thorough and accurate TCO analysis on any mobile devices you are considering for use in your retail store.

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