Understanding the true cost of automation (TCO)

The cost of automating an application can be broken down into several categories. The initial investment often receives most of the attention, but ongoing operating and maintenance costs should also be factored in.

Let’s first look at the initial costs of acquiring and implementing a robotic and automation solution. They can be categorized as follows:

Hardware Components 

A robot arm is usually the biggest expense in this category, but a solution will include many other components, from sensors to End-of-Arm Tooling (EOAT), such as grippers or welding tools, that allow the robot to perform its tasks. General mechanical elements and structural pieces also represent a significant part of these costs. Integrators usually require upfront payments to cover some of their hardware costs before commissioning starts.

Software and Controls

This includes the cost of programming the robot, implementing control systems, and potentially integrating with existing factory management software. More complex applications may require advanced software features like machine vision or artificial intelligence, which can significantly increase costs.

Safety Measures

Depending on the type of robot and its intended use, various safety features may be required. These can include physical barriers, light curtains, safety sensors, and emergency stop systems. The cost of these measures can vary widely based on the complexity of the setup and regulatory requirements.

Custom engineering and integration

Many engineering hours can be involved in tailoring an automation solution to the specific needs of the company and installing it in its facility, including running the appropriate tests (FAT, SAT) to ensure the solution meets agreed-upon targets. More complex applications requiring further development and customization can vastly increase these costs.

Training

This covers the cost of training employees to operate, maintain, and troubleshoot the robotic system. Training costs can vary based on the complexity of the system and the number of employees who need to be trained. Some integrators include basic training in their package, while more extensive training programs may incur additional costs.

In addition to the initial costs, ongoing operating and maintenance costs are also an important factor. These may include electricity, air for pneumatics, keeping replacement parts in stock, yearly maintenance, ongoing support, and sometimes added costs for higher-quality raw materials needed – to name a few examples. It is not uncommon for these yearly running costs to add up to about an extra 10-12% of the initial equipment costs – although it varies based on factors like the type of application and age of the equipment.  

Key factors influencing automation costs

It is clear that the cost of automating is more than the price of buying some equipment. It may be more accurate to think about the use case you are trying to solve instead: What are the total costs of automating a specific application?

These costs will be heavily influenced by the type of application and, particularly, the level of automation you aim for. Automation scope refers to how much of a process you aim to automate. Full automation (100%) may provide significant benefits but can be prohibitively expensive. Often, partially automating a process (e.g., 50-75%) can offer a better balance of benefits and costs.

In some cases, such as certain high-volume, repetitive tasks in controlled environments, a fully automated solution may be desirable. Other times, however, the ideal balance between benefits and costs is found at lower automation levels, where it's easier to use standard solutions with relatively little extra engineering costs. When scoping an automation project, the chosen degree of automation often plays a decisive role in determining whether the project is feasible.

This brings us to the second cost factor: technology maturity. Technology maturity indicates how established and proven a particular automation solution is. Mature technologies often come with lower costs and risks, while cutting-edge or experimental solutions may be more expensive and risky to implement. Automating an application is usually more affordable if proven standard solutions exist on the market. When a solution requires major development or re-engineering and involves more experimental technologies, the cost and risk also increase---often substantially.

Finally, the complexity of implementing the solution will also be a large cost factor. If a new solution requires major changes to existing production processes and equipment, this may also significantly increase the TCO of automation. Accounting for this complexity in the budgeting phase is, therefore, critical.

Estimating costs and getting accurate pricing

So, how do you take these factors into account and determine the total costs? There are two ways to answer this question.

The first is this: The only way to really know the cost of a solution is to ask the market. Not by asking for the price of a specific robot arm, but by asking: What is the cost of automating this specific application, meeting our needs, requirements, and performance goals? This can be done by creating a request for information and obtaining budgetary quotes from a range of relevant integrators, comparing their offers, and engaging in closer dialogue to find the right solution and supplier.

HowToRobot’s platform allows companies to do this free of charge, obtaining a range of budgetary quotes from vetted and relevant integrators – often in just a few weeks. Our team also helps with scoping the project and providing sourcing project management support. By being vendor-independent, we help ensure a transparent, non-biased sourcing process leading to a cost-competitive range of options. Tell us about your project here to get started.

Before engaging with vendors, however, companies may want to have a rough idea about the costs to know if the project makes overall sense financially. This will often require involving someone with expertise, experience, and market knowledge in automation and robotics – for two reasons:

1. Cost savings: The scope of the automation project will determine the solution costs and overall feasibility of the project. By getting an impartial expert to accurately describe and optimize the scope, they can adjust the desired level of automation, as well as account for technology maturity and implementation risks, to reach the ideal sweet spot between costs and benefits. HowToRobot has helped companies achieve more than 50% cost savings on solutions with this approach.
2. Early cost estimations: After scoping a project, an experienced advisor will have sufficient data to give a rough estimation of the expected cost range of automating the application in question. This knowledge can help validate the business case and support an internal decision on whether to proceed with the project.

If this expertise is lacking in-house – or internal teams need additional support – HowToRobot’s impartial advisors can help. Get in touch with us today to discuss your project.

Conclusion: Focus on solutions, not just robots

When considering automation, it's critical to think beyond individual robots and focus on complete solutions. By approaching automation from a use-case perspective and considering the Total Cost of Ownership, businesses can make informed decisions that align with their objectives.

To maximize the value of your automation investment:

1. Start with the right questions: Ask, "What will it cost to automate this specific application?" rather than focusing on individual robot prices.
2. Leverage impartial expertise: Working with impartial advisors can lead to significant cost savings by optimizing the automation scope and finding the sweet spot between costs and benefits. Their expertise complements your internal knowledge, ensuring you get the ideal process scope and the best fit between your needs and available solutions.
3. Streamline your sourcing process: Use platforms like HowToRobot to quickly obtain a range of competitive offers from vetted integrators. This structured approach saves time and ensures you're comparing apples to apples.

Successful automation isn't about having the most advanced robot – it's about implementing the right solution that delivers the most value for your business. By leveraging impartial expertise and efficient sourcing processes, you can navigate the complex world of automation more effectively, leading to better outcomes and significant cost savings.