2. Calculate the Total Cost of Ownership
Security companies follow different patterns and methods of calculating the cost of patrol vehicles. While the crucial factors considered during these calculations include repairs and fuel expenses, there are some more factors that you cannot ignore.
These factors include the insurance of cars, depreciation, sale price of the security guard cars, etc. All these factors together help you calculate the life-cycle cost of your patrolling vehicles. Besides, you also need to take care of the production of the car when calculating such costs. Let us look at the method of life-cycle costing that you can use for easy calculations.
To begin with, you need to know that the cost of a patrolling car does not equal the price paid for it when you purchased it. There are two types of costs you can consider here – fixed costs and variable costs. The former includes interests, insurance, fees, lease, depreciation, etc., and the latter includes maintenance charges, repair, oiling, tire change, fuel, washing of the cars, toll taxes, etc.
All these costs together make the life-cycle cost of your security guard cars. Here is how you calculate it.
1. Add the following:
- Purchase Price of the car
- Finance Expenses
- Insurance Expenses
- Fees and Taxes
- Maintenance and Repair Expenses
- Fuel Expenses
2.Subtract the following:
- The Resale value of the car
3.Multiply the Grand Total by 100 to get total expenses in cents
4.Divide by Mileage to get Cents per Mile
So, to sum it up, the life-cycle cost of your patrolling vehicle equals:
Total Cost – Resale Value of the Car = Grand Total
Grand Total X 100 = Total Expenses in Cents
Total Expenses in Cents/Mileage = Cents per Mile
The cents per mile are multiplied by the total miles covered by your vehicle, and you get the life-cycle cost of your security guard cars! Once you have this value, you can check each car to know one has a higher cost. Then cut down on extra expenses to achieve a lesser life-cycle cost.