Achieving Pricing Equilibrium and Prioritising Aftercare in Industrial Machine OEM Services

In the fast-changing industrial manufacturing sector, there’s a reliance on original equipment manufacturers (OEMs) for the production of cutting-edge machinery and comprehensive aftercare services. With industries such as processing and packaging, industrial robotics and machine vision continuing to advance, the need for effective aftercare becomes more obvious. Care must be taken over the pricing of such services for the benefit of OEMs and their clients.

There’s clear value in having OEM technicians onsite for servicing and fault finding. However, a balance must be struck in the pricing of such services. Overcharging could put prospective customers off, with alternative suppliers being chosen. On the other hand, profitability and sustainability could be sacrificed if the rates are set too low. So what constitutes the appropriate service charge?

Insights from Automate UK OEM Poll

Automate UK’s recent poll of OEMs revealed that most charge a day rate of £800 to £900 for the support of service engineers. Some of the respondents said that they charge £900 to £1,000, while others have aftercare day rate prices of £1,000 and above. Most of the OEMs also set weekend day rates 50% above those of weekdays. However, significantly more may have to be paid for emergency weekend support.

While the poll sample size was fairly limited, the results can be seen as indicative of wider pricing trends. Factors such as the need for travel and availability of support local to the client’s site were mentioned as having a bearing. Many OEMS also offer packages and reduced rates in return for client loyalty. A surcharge may be incurred in the event of an overnight stay, with the income being passed back to the engineer.

“While this poll gives us an indication of service charges within the industry, the results are in line with what I have seen in the past for site services. While there have been increases to service charges over time, I do believe they have been below inflation and increases seen on products. I believe one of the biggest challenges seen by SME’s, OEM’s as the providers of these services are last minute requests. While everyone accepts that emergencies happen and have support in place, I have seen many cases of companies trying to avoid paying for support and requiring it anyway. This creates stress on the service provider that could have been avoided if the support had been requested earlier and allowed for better planning.”, Laurie Barnes - CTO - Automate UK

Emphasising Aftercare Value

Aftercare services can be of great benefit to manufacturing companies, with equipment breakdowns potentially delaying production and resulting in decreased customer satisfaction. Regular maintenance can also extend equipment lifespan, reducing the need for potentially expensive replacements.

Other aftercare benefits include:

• Minimising the need for potentially costly repairs
• Maintaining equipment efficiency, reducing energy consumption and operating costs
• Preventing the worsening of equipment issues, for time and cost savings
• Reducing the risks of injuries and fatalities, which might otherwise result from the use of poorly maintained equipment.

A fine balance is vital in ensuring the availability of dedicated service engineers, project engineers and design engineers while avoiding any negative impact on current projects. Clients are also increasingly coming to see the arrangement of comprehensive aftersales support packages (including benefits such as 24-hour availability and rapid response) as the norm. However, it’s difficult to manage and guarantee such services if the balance of resources isn’t right.

It’s generally accepted that emergencies do happen and that there’s a need for support in such instances. However, end users face a risk in reducing routine maintenance as a means of cutting costs. This could result in their having no other option but to pay more for emergency call-outs. The speed of return to normal production can be slow in such instances, resulting in significantly added costs. It’s an ill-advised approach that adds to the pressure on OEM’s, suppliers, and end users.

Sustaining Stability Through Aftercare

The pricing of travel to client sites and overnight surcharges have been maintained at a fairly consistent level over the past 15+ years. However, there has been a slight increase in the pricing of aftercare services, in line with engineer price rises and expenses. Still, such services remain relatively affordable, considering inflation rates and product pricing. This underscores the industry's dedication to supporting clients and ensuring the longevity of their investments.

There’s a tendency for OEMs to over-resource given the focus on keeping client equipment in optimum condition, with prices being pushed up. The integration of machines with Industrial VPN Gateways is one such example. This connective technology allows for remote access, meaning that site visits can be avoided. It can help you to remotely diagnose or even fix an issue without the time and cost of a site visit. And that’s not to mention the sustainability benefit.

With that said, site IT policies sometimes don’t allow for such remote system access. This can mean that OEM site visits are unavoidable, even for issues that can be resolved simply with the plugging in of a laptop and adjustment of a few parameters.

Reflections on the Pricing Issue

The balanced pricing of aftercare services in the industrial machine sector depends on taking a nuanced approach with a focus on customer value and sustainability. Although recognising the need for fair and reasonable pricing, OEMs should also consider the importance of aftercare services in terms of maintaining customer satisfaction and long-term loyalty. By valuing aftercare as much as initial sales, OEMs can differentiate themselves in the market and drive mutual success for themselves and their clients.

“Industrial manufacturing machine OEMs across processing and packaging, industrial robotics, and industrial machine vision often charge for having expert technicians onsite with end-user businesses for service and fault finding. Finding the right balance in pricing is crucial for both parties involved. Overcharging might deter customers from choosing them as suppliers, while undercharging could lead to financial losses. OEMs are grappling with the question of what constitutes the appropriate charge-out rate to strike that balance. In pursuit of this equilibrium, OEMs seek to ensure fair compensation for their engineers while providing peace of mind to end-users and sustaining profitability.”, MJ. Mark Jenkins - Senior Engineer & Director - Huxley Bertram Engineering Ltd

Supporting deliver data and insights that support the industry

Automate UK wants to take a moment to thank Nicky Metcalfe from Endoline for their thoughtful feedback and for reaching out to us. Nicky shared:

"We want to express our gratitude to Automate UK for their invaluable support to our Service department. They came through when we needed industry data to review our service offerings. Automate UK grasped our needs quickly and efficiently provided the necessary data, which helped confirm our assumptions and shape our fair pricing policy. Their assistance was instrumental in our decision-making process."

This comment highlights how effectively Endoline communicated their needs, enabling us to provide precise and useful industry data. It serves as an excellent example of how a clear and detailed request can facilitate a swift and helpful response.

We invite all our members to approach us with any technical information they may need. Whether it's data to support your service offerings, insights to confirm your assumptions, or guidance to shape your policies, Automate UK is here to assist. Your feedback and inquiries are invaluable to us, and we are committed to supporting you in every way we can.