At AGCO, our philosophy is to provide our clients the overall lowest cost. Most people realize that quality always cost less when considered over time. That is the main reason why people look for high quality products. Higher quality lasts longer and performs better.
True quality always cost less
To better illustrate the principle, it is important to define the difference in Cost and Price.
Price is the initial amount paid for an item or service, for instance the amount of the price tag. Many people only consider price and this cost them a great deal. Trained buyers, such as professional purchasing agents, have learned, price is only a part of the picture.
Cost includes the price paid, plus other expenses involved, divided by how long the item or service last. For example let’s consider a wheel alignment on a vehicle. Suppose the price is $59.99 but because it is not done properly, it wears two $150.00 tires in six months. This sort of thing has happened to many people. Now let’s examine the cost.
Cost versus Price
$59.99 for the alignment
$300.00 for the tires
that’s $359.99 for six-months of driving
or $719.98 per year
Now consider a proper alignment at $79.98. This alignment and the tires now last four years, with no problems. The cost would be $300.00 for the tires plus $79.98 or $379.98 for four years, that is $94.99 per year instead of $719.98. This does not take into account the time and aggravation involved. The professional service, though higher in initial price, actually cost much less.
Another very common example is tires. A high quality set of tires, properly mounted and balanced may cost $900.00. They last 70,000 miles, give excellent service and offer no problems. No repeat visits for alignment problems, no worn out shock absorbers or tie rods. The cost is about 1.3 cents per mile.
Another cheap set may cost $600.00 but they vibrate and ride badly. Two different shops try to balance them at $60.00 per visit. In desperation the client decides to live with the poor performance. After 30,000 miles they are worn out, but now the rack and pinion is also leaking. The rack was damaged by the bad tires.
The cost is $600.00 for the tires, $120.00 trying to make them work, $900.00 for damaged rack and pinion, divided by 30,000 miles. That is nearly four times the cost per mile of the good tires. This does not include the inconvenience or putting up with the poor performance for 30,000 miles.
When you think about it, cheap repairs, tires and parts are just too expensive. It is always less expensive to do it right the first time. This is the philosophy on which AGCO has built its reputation, since 1974. We think you will be pleasantly surprised.