Unit price is the wrong number to compare when you’re choosing a retail display. What matters is total cost of ownership: what a display actually costs across every campaign it’s used in, not just the invoice for the first one. This guide walks through the real 3-year math — $390,000 versus $122,500 for 500 displays across 4 campaigns a year — and shows procurement teams how to run the same comparison for their own program.
Why Unit Price Is the Wrong Way to Compare Displays
When it comes to procuring retail displays, the initial unit price often becomes the focal point of decision-making. Procurement and trade marketing professionals frequently compare the price per unit without considering the broader financial implications. This narrow approach can lead to suboptimal choices that may seem economical upfront but prove costly over time. The unit price alone doesn’t account for various hidden expenses and recurring costs that accumulate over the lifespan of a display.
Focusing solely on the unit price ignores factors like durability, reusability, and maintenance costs. For example, cardboard displays may appear inexpensive at first glance, but they tend to wear out quickly, necessitating frequent replacements. On the other hand, reusable displays might come with a higher initial price tag, but their extended lifespan and lower maintenance requirements can result in significant long-term savings.
Moreover, the unit price does not reflect the total cost of ownership (TCO), which includes shipping, tariffs, lead times, and labor costs for setup and takedown. By not considering TCO, organizations may find themselves repeatedly spending on new displays, incurring high shipping fees, and facing delays that can disrupt marketing campaigns. Therefore, it is crucial to adopt a comprehensive approach to display procurement, one that evaluates all associated costs over a defined period.
What Total Cost of Ownership (TCO) Means for Retail Displays
Total Cost of Ownership (TCO) is a financial estimate designed to help buyers and owners determine the direct and indirect costs of a product or system over its entire lifecycle. For retail displays, TCO encompasses the initial purchase price, shipping costs, tariffs, labor for setup and takedown, and any costs associated with maintenance or replacement. Understanding TCO allows procurement professionals to make more informed decisions, ensuring the chosen displays offer the best value over time.
In the context of retail displays, TCO includes various elements that often go unnoticed in the initial purchase phase. For example, while a cardboard display may cost less initially, the need for frequent replacements and higher shipping costs can quickly add up. In contrast, a reusable display, though more expensive upfront, may incur fewer shipping costs and require less frequent replacement, making it more cost-effective in the long run.
Additionally, TCO takes into account the labor costs associated with setting up and dismantling displays. These costs can be substantial, especially for large retail campaigns that require frequent changes. By evaluating TCO, companies can better understand the true financial impact of their display choices, leading to more sustainable and cost-effective procurement strategies.
The 3-Year Math: 500 Displays, 4 Campaigns a Year
To illustrate the importance of TCO, let’s consider a scenario involving 500 displays used in four campaigns per year over three years. If a company opts for cardboard displays at $65 each, the cost per campaign is $32,500. Over four campaigns in a year, the total cost is $130,000. Over three years, this amounts to $390,000. This calculation doesn’t include shipping, labor, and other hidden costs, which can further escalate the expenses.
Now, let’s compare this with the cost of reusable displays. Suppose each reusable display costs $245. The initial investment for 500 displays is $122,500. Unlike cardboard displays, reusable displays do not need to be replaced for each campaign. Instead, they can be refreshed with new graphics, which typically cost a fraction of the display’s price. Assuming the cost to refresh each display is $15, the annual cost for four campaigns is $30,000. Over three years, this adds up to $90,000. When combined with the initial investment, the total cost over three years is $212,500.
By comparing the two scenarios, it becomes evident that the total cost of cardboard displays is significantly higher than that of reusable displays. The cardboard displays cost $390,000 over three years, while the reusable displays cost $212,500, resulting in a savings of $177,500. This example underscores the importance of considering TCO when making procurement decisions.
Cardboard’s Hidden Cost: Buying Every Display Again
One of the most significant drawbacks of cardboard displays is their lack of durability. Cardboard displays are prone to wear and tear, making them unsuitable for long-term use. They are easily damaged during shipping, setup, or even by customers in the retail environment. As a result, companies often find themselves purchasing new displays for each campaign, leading to recurring costs that can quickly add up.
In addition to the direct cost of purchasing new displays, there are indirect costs associated with the frequent replacement of cardboard displays. These include the time and labor required to set up and dismantle the displays, as well as the cost of disposing of old displays. These hidden costs can significantly impact the overall budget for retail campaigns, making cardboard displays a less economical choice in the long run.
Furthermore, the environmental impact of repeatedly discarding cardboard displays cannot be ignored. The production and disposal of cardboard contribute to deforestation, greenhouse gas emissions, and landfill waste. By opting for more sustainable and durable display options, companies can reduce their environmental footprint while also achieving cost savings.
Reusable Displays: Paying Once, Refreshing the Graphics
Reusable displays offer a compelling alternative to cardboard displays, providing a more durable and cost-effective solution for retail campaigns. Unlike cardboard displays, reusable displays are designed to withstand the rigors of the retail environment, making them suitable for long-term use. This durability eliminates the need for frequent replacements, resulting in significant cost savings over time.
One of the key advantages of reusable displays is the ability to refresh the graphics without replacing the entire display. This allows companies to keep their marketing messages up-to-date without incurring the high costs associated with purchasing new displays. The cost to refresh the graphics is typically a fraction of the cost of a new display, making it a more economical option for ongoing campaigns.
In addition to cost savings, reusable displays offer environmental benefits. By reducing the need for frequent replacements, companies can minimize their environmental impact, contributing to sustainability goals. Reusable displays also reduce the amount of waste generated, as they do not need to be disposed of after each campaign. This makes them a more sustainable choice for companies looking to reduce their environmental footprint.
Shipping, Tariffs, and Lead Time in the TCO Equation
Shipping costs are a critical component of the total cost of ownership for retail displays. Cardboard displays, due to their lightweight and bulkiness, often incur higher shipping costs compared to reusable displays. Additionally, the need to frequently replace cardboard displays means these shipping costs are incurred multiple times, further increasing the overall cost.
Tariffs and import duties can also impact the cost of retail displays, particularly for companies that source their displays from international suppliers. These additional costs can significantly affect the overall budget for retail campaigns, making it essential to consider them when evaluating the total cost of ownership. Reusable displays, with their longer lifespan, can help mitigate these costs by reducing the frequency of shipments.
Lead time is another important factor to consider when evaluating the total cost of ownership. Long lead times can disrupt marketing campaigns, leading to missed opportunities and lost revenue. Cardboard displays, with their shorter lifespan, often require more frequent orders, increasing the likelihood of delays. Reusable displays, with their durability and longer lifespan, can help ensure timely campaign execution, reducing the risk of delays and associated costs.
Labor Cost: What Setup Time Adds to Every Campaign
Labor costs are a significant component of the total cost of ownership for retail displays. The time and effort required to set up and dismantle displays can vary significantly depending on the type of display used. Cardboard displays, while relatively easy to assemble, often require frequent replacements, resulting in repeated labor costs for each campaign.
Reusable displays, on the other hand, are designed for long-term use and require less frequent setup and takedown. While the initial setup may take more time compared to cardboard displays, the reduced frequency of replacements can result in significant labor cost savings over time. Additionally, reusable displays are often designed for ease of assembly, further reducing the time and effort required for setup.
By considering the labor costs associated with setup and takedown, companies can gain a more comprehensive understanding of the total cost of ownership for their retail displays. This can help inform procurement decisions, ensuring that the chosen displays offer the best value over time.
How to Build Your Own TCO Comparison
Building a total cost of ownership comparison for retail displays involves evaluating all direct and indirect costs associated with each type of display over a defined period. This includes the initial purchase price, shipping costs, tariffs, labor costs for setup and takedown, and any costs associated with maintenance or replacement.
To start, gather data on the initial purchase price of each type of display. This should include any discounts or bulk pricing options that may be available. Next, estimate the shipping costs for each type of display, taking into account factors such as weight, size, and shipping distance. Be sure to include any tariffs or import duties that may apply.
Next, evaluate the labor costs associated with setting up and dismantling each type of display. This should include the time required for assembly, as well as any additional labor costs for maintenance or replacement. Finally, consider any additional costs associated with maintaining or replacing the displays over the defined period. By compiling all of this data, you can calculate the total cost of ownership for each type of display and make more informed procurement decisions.
$267,500 Saved: A Real 3-Year Case Study
To illustrate the potential cost savings of considering total cost of ownership, let’s look at a real-world case study involving a company that used 500 displays for four campaigns per year over three years. Initially, the company opted for cardboard displays, with a unit price of $65. The total cost for each campaign was $32,500, resulting in an annual cost of $130,000. Over three years, the total cost was $390,000.
After evaluating the total cost of ownership, the company decided to switch to reusable displays, with a unit price of $245. The initial investment for 500 displays was $122,500. The cost to refresh the graphics for each campaign was $15 per display, resulting in an annual cost of $30,000. Over three years, the total cost to refresh the graphics was $90,000. When combined with the initial investment, the total cost over three years was $212,500.
By switching to reusable displays, the company saved $177,500 over three years. Additionally, the company reduced shipping costs, labor costs, and environmental impact by opting for more durable and sustainable displays. This case study highlights the significant cost savings that can be achieved by considering total cost of ownership when making procurement decisions.
Questions to Ask Before You Approve a Display Budget
Before approving a display budget, it is essential to ask the right questions to ensure that all costs are considered and that the chosen displays offer the best value over time. Here are some key questions to ask:
- What is the initial purchase price of the displays, and are there any discounts or bulk pricing options available?
- What are the shipping costs for the displays, and do they vary based on weight, size, or shipping distance?
- Are there any tariffs or import duties that will impact the cost of the displays?
- What are the labor costs associated with setting up and dismantling the displays, and how often will this need to be done?
- What is the expected lifespan of the displays, and how often will they need to be replaced?
- What are the costs associated with maintaining or refreshing the displays, and how do these compare to the cost of purchasing new displays?
- What is the environmental impact of the displays, and are there more sustainable options available?
- How does the total cost of ownership for each type of display compare over a defined period, such as three years?
By asking these questions, procurement and trade marketing professionals can gain a more comprehensive understanding of the total cost of ownership for retail displays. This can help inform procurement decisions, ensuring that the chosen displays offer the best value and align with the company’s financial and sustainability goals.
In conclusion, the unit price alone is not an adequate measure for comparing retail displays. By considering the total cost of ownership, including factors such as shipping, tariffs, labor costs, and environmental impact, companies can make more informed procurement decisions. This approach can lead to significant cost savings, improved sustainability, and more effective retail campaigns. The real cost of retail displays is not just about the initial purchase price; it’s about understanding and managing all the associated costs over time.