AGV Rental compared to Buy and RaaS
The Mobile Robot market is booming. It keeps on growing year after year. It is understandable that more and more companies have started to design and manufacture mobile robots. The result? More competitors in the backyard.
Differentiation from the competition also means finding new commercial strategies to market the robots.
My name is Alfredo Pastor ... and I have sold and rented dozens of AGVs and AMRs.
In this article; I will explain you my experience and the pros/cons of each solution. ⚠ Inthis article I link to a whitepaper about AGV renting and an EXCEL tool calculator where you can evalute how much could cost to rent your mobile robot system
🙋🏼♂️ I recommend downloading both, to have a wider understanding of the process... by the way, they're free. 😎
Financial costs, maintenance, best practices... what's important to know about AGV/AMR Rental?
| Click here to download the White Paper |
There are many reports indicating the mobile robot market is growing. Regardless of the specific numbers, all the reports state that the automatic guided vehicles and the autonomous mobile robot market is prospering and the trend seems to be accelerating.
🙋🏼♂️ In my opinion, there are three key points directly linked with the benefits of agvs.
- Mobile Robots enhances productivity. It has been demonstrated that in the long run AGVs and AMRs increase productivity by reducing costs, ensuring quality, minimizing mistakes, etc.
- Mobile Robots are becoming cheaper.
- Mobile Robot technology is becoming user friendly.
The result? Many customers demanding for mobile robot solutions, thus many companies are supplying mobile robot solutions. Easy! (basic tip for those who studied microeconomics...).
In order to survive and overcome competitors, it is becoming mandatory for AGV suppliers to adapt and differentiate the commercial offers available for the customers.
💲 In this article, I will explain 3 different commercial offers for mobile robots:
- Buy (CAPEX)
- Leasing (or renting)
- Robot as a Service (RaaS)
1) Buy: The Traditional CAPEX
Simply put, you invest in a mobile robot system, thus you buy all the system, and the property is yours.
This is the traditional CAPEX approach.
Let’s say we have a project with 3 AGV Stackers that will substitute nr 2 manned vehicles working 2 shifts.
Your supplier offers as follows:
Click here to download the excel tool
This is the summary of the "material costs": 
And here the "non material costs":
Click here to download the excel tool
By the way, do not forget to read this article if you wish to know more about the costs associated to an automated Guided Vehicle System.
So, you must pay near $420.000, moreover, the mobile Robots manufacturers used to ask for advanced payments before starting the project (What a horrible habit!! 😎).
Typically, you must be ready to anticipate near 30% at the order, near 40% at delivery and around 30% at approval… or even worse.
In these conditions, depending on your specific project, the payback could be near 2 years for a 3 shifts of operation or 3 years for 2 shifts operations.
In any case, you must find the cash somewhere.💰
Once you have bought the system you have to think about the maintenance of the mobile robots and the software.
How much does an AGV System maintenance cost? Again, it will depend on your project, your vehicles, and your supplier.
It is important to know that you will have to pay for the AGV system maintenance service unless you have well skilled technicians able to perform maintenance on their own (let’s say that it would be a rare case).
2) Leasing or renting the AGV System
Some mobile robot suppliers (or their distributors) offer the possibility to lease the whole system or a part of it, mainly the vehicles, batteries, and chargers.
💡 By the way, the only difference between renting or leasing is the contract period. Leasing tends to last from 3 to 5 years while renting is short term, even months. In this article, I refer to long contracts but... apologize, I will call it lease or rent.
Do not miss the webinar... all the concepts in this article... but much more in detail
| Click here to watch the webinar |
In the rental model, the supplier keeps the ownership of the leased equipment and, at the contract due date, if the contract is not renewed, the supplier picks up its equipment.
Typically, with this agreement, the supplier offers a flat monthly fee that includes the equipment and the full-service maintenance.
What does AGV lease fee cover?
✅ Financial costs. The supplier anticipates the investment, so it applies an annual tax given by the cost of the capital.
✅ Residual cost of the equipment. Mobile Robots technology is changing fast so the residual cost of a mobile robot system after 36-60 months could be close to zero.
✅ Preventive maintenance. So, the programmed maintenance is to be performed from time to time to keep the system running properly.Corrective maintenance. So, the maintenance done due to system or vehicle failures.
✅ The spare parts needed to perform Preventive and Corrective Maintenance.
In our case above, you should consider paying:
- A monthly fee of near $9.700 for vehicles, batteries and charging stations (with 60 months contract and 6.5% interest rate).
What happens with non material costs? 🤔
There are several issues:
✅ Fiscally: Many countries do not allow to rent a non physical good.
✅ How to handle the service part? If you include this cost in the vehicle fee, it would be complex to manage the cost of future project modifications and the definition of potential new vehicles.
Typically, commissioning and other services are directly sold to the customer as operational expenses (OPEX), meaning the full project isn't leased in its entirety, just the goods.
Of course, depending on the number of shifts, cost of the manual vehicles and labor cost... the payback will change.
| Click here to download the EXCEL Tool |
3) Mobile Robot RaaS (Robot as a Service): Pay per task
With a RaaS model for mobile robots, the supplier is paid based on the effective AGV/AMR performance.
It is necessary to agree to a KPI such as the number of picks, number of pallets moved, meters, minutes, etc, then apply a fee to the selected KPI.
Doing it this way, the supplier gets involved in the customer operations being somehow responsible for the overall performance.
The main problem is that it is not easy to identify and give a value to the right KPI.
Of course, the customer can understand what was his KPI cost before adopting the mobile robot system and compare it with the mobile robot proposal.
If you had an annual cost (see table above) of $465.000 and your manned forklifts moved 100.000 pallets/year (depending on distance, etc) your cost per pallet would be $4,65.
If your mobile robot supplier offers a better price… you save on costs from the very beginning.
| Click here to download the infographics about RaaS |
Conclusions
In the long run, buying your mobile robot system is the less expensive solution. On the other hand, investing means cash… and cash is difficult to find.
There are other solutions such as leasing or the RaaS that allow you to deploy mobile robots with limited or even without any investment and you can start saving money from the very first moment of operation.
It is mandatory to find the best partner able to support your operations (technically and financially) and ensure, or even improve your productivity.
Written by Alfredo Pastor Tella (agvnetwork editor).
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