Use the Total Cost of Ownership Estimator (TCO) to make a strong case when selling against offshore competitors! Sixty percent of companies make sourcing decisions based on rudimentary metrics, such as wage rate, ex-works price or landed cost, often resulting in a 15 to 30 percent understatement of actual offshoring costs. The TCO Estimator is a free online tool that helps companies account for all relevant factors—overhead, balance sheet, risks, corporate strategy and other external and internal business considerations—to determine the true total cost of a part or assembly.
When you find yourself competing with a lower-priced offshore product, we suggest offering to help the customer compare the TCO of your offer vs. the lower-priced offshore offer. If the buyer resists, gather whatever information you can from other contacts at the company, do TCO from the customer’s perspective, and review the results with the buyer. It is best to be conservative and understate the hidden costs.