The True Cost of Ownership Isn’t the Purchase Price
When comparing construction equipment, most buyers focus on the upfront cost. It feels logical. A machine that costs $150,000 looks like a better deal than one priced at $200,000. But when you factor in resale value, depreciation, and total cost of ownership, the more expensive machine can actually cost significantly less over time.
This is especially true when comparing premium equipment like Hitachi excavators to lower-cost alternatives that depreciate faster.
Let’s break it down with a realistic example contractors face every day.
| Machine A | |
|---|---|
| Purchase Price | $205,000 |
| Hours after 4 years | ~3,800 |
| Resale Value | $145,000 |
| Total cost of ownership | $60,000 |
| Machine B | |
|---|---|
| Purchase Price | $155,000 |
| Hours after 4 years | ~3,800 |
| 4 Year Resale Value | $70,000 |
| Total cost of ownership | $85,000 |
Even though the second machine was $50,000 cheaper upfront, it actually cost $25,000 more to own.
Why Some Construction Equipment Holds Value Better
Machines that retain value typically have a few key things in common:
- Strong reputation for reliability
- Dealer support and parts availability
- Durable hydraulic and structural components
- High demand in the used equipment market
- Long service life
- Consistent performance across job types
When contractors know a machine will last, they are willing to pay more for it used. That demand keeps resale values strong.
Why Depreciation Is the Largest Cost of Equipment Ownership
Fuel, maintenance, and service costs add up. But depreciation is typically the biggest expense over the life of a machine.
A machine that loses $85,000 in value costs far more than one that loses $60,000, regardless of purchase price.
This is why experienced contractors ask us:
- What will this machine be worth in 4 years
- Is there strong used market demand
- Does this brand hold value
- Is dealer support strong
- Will parts be easy to find later
These questions determine real ownership cost.
Most machines fall into these general ranges over 4 to 5 years.
Strong resale equipment
Loses about 25% to 35% of value
Mid tier resale equipment
Loses about 35% to 50% of value
Lower resale equipment
Can lose 50% to 65% of value
This difference can mean tens of thousands of dollars in ownership cost.
Contact Us Today
The cheapest machine upfront is not always the least expensive to own. A machine that costs more but holds its value can significantly reduce depreciation and improve trade-in value when it is time to upgrade.
When comparing construction equipment, it is important to look beyond the purchase price and consider long term value, support, and demand in the used market. These factors ultimately determine the real cost of ownership.
If you are looking for professional guidance, locally owned support, and equipment that holds its value, the team at Luby Equipment is here to help. We work with contractors every day to compare machines, evaluate resale value, and choose equipment that fits both the job and the long term investment.
Contact us today to speak with our team about new and used construction equipment, rentals, parts, and service support. We will help you find the right machine and make sure it continues to perform long after the purchase.
Call Us (636) 343-9970