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Tipping the Scales: Cost vs Price

As consumers, it’s important to weight the price versus cost in the products and services we buy. Whether it be vehicles, light bulbs, shoes, computers, phones, or whatever else; comparing an item’s true cost versus its initial price is very important to choosing the right item. Isn’t that rule the same for lubricants? Let’s consider the initial price in three key product areas with Royal products compared to competitor products and see who ends up on top.

                                                                                                                                                  Superior

                                                                Color Coded            Resists Emulsification             Non-Foaming          Per Gal. Price

A 80w/90 Gear Oil                                   No                           No                                           No                           $12.00

B 80w/90 Gear Oil                                  No                           No                                           No                           $16.67

C 80w/90 Gear Oil                                  No                           No                                           No                           $24.20

646 Supreme 80w/90                               Yes                           Yes                                             Yes                            $41.25

 

As we can see in the above comparison, though the three competitor products are all priced significantly lower than 646, none meet the high standards that 646 meets. So, what is the actual cost of those products? Take a look at the example below.

Customer X Gear Oil Record, per unit

Year         Lubricant Used                       Notes                                                                                           Total Lube Cost

2012:       A 80w/90 Gear Oil                  Used one pail every 4 weeks- 12 pails in 2012-                      $720.00 total cost

2013:       B 80w/90 Gear Oil                  Used one pail every 6 weeks- 8 pails in 2013-                        $666.80 total cost

2014:       C 80w/90 Gear Oil                  Used one pail every 8 weeks- 6 pails in 2015-                        $726.00 total cost

2015:       646 Supreme 80w/90             Used one pail every 26 weeks- 2 pails per year-                     $495.00 total cost

 

Clearly, the actual cost of each product differed significantly from their upfront cost. What the customer in this example was doing in switching their gear oil every year was to find an oil that could reduce their equipment failure and subsequent downtime. In the process, not only did they find that (usually) more expensive initial oils did reduce failure and downtime, but they also reduced long-term cost. In 646, this customer found what they were looking for; reduced lubricant consumption, reduced equipment failure/downtime, and reduced maintenance cost; all of which lead to reduced costs and increase the customer’s bottom line. Let’s look at an example for Ultima 2100, one of the top greases on the market today.

                                Industry High                          Industry Low                           Industry High                          Per Tube

                                Operating Temp.                    Wear-Scar                               EP Capability                           Price

A Grease                 No                                         No                                        No                                           $4.19

B Grease                 No                                         No                                        No                                           $4.84

C Grease                 No                                         No                                        No                                           $5.99

Ultima 2100            Yes                                          Yes                                         Yes                                            $7.49

 

Customer X Grease Record, per unit

Year         Lubricant Used                          Notes                                                                                        Total Lube Cost

2012:       A Grease                                 Used one tube every 1 Day- 251 tubes in 2012-                 $1,051.69 total cost

2013:       B Grease                                 Used one tube every 2 Days- 126 tubes in 2013-                 $609.84 total cost

2014:       C Grease                                  Used one tube every 3 Days- 84 tubes in 2015-                 $503.16 total cost

2015:       Ultima 2100                            Used one tube every 7 Days- 50 tubes per year-                       $374.50 total cost

 

Again, Ultima 2100 is the product with the least overall cost having reduced the customer’s total grease cost 65% over 2012 and their A Grease use. And again, this does not even include the saved cost from reduced equipment failure, lost production, and repair. It is important to note that this same savings outlook can be used for any Royal product when compared to competitor product use.

 

*A, B, & C gear oil and grease pricing is based on actual popular, name-brand competitor pricing. Each example is based on actual Royal customer savings and experiences. 

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