When does a laser system pay for itself in day-to-day operation?

In industrial surface processing in particular, ancillary times, consumables, external processing, transport, rework and production interruptions can account for a considerable share of the total costs. A commercial comparison therefore has to look at the complete process – not just the minutes in which a machine is actively working.

For modern laser processes, Fraunhofer likewise points out that productivity cannot be reduced to power and feed rate. Short cycle times, low ancillary times, little rework and stable quality belong in the assessment together.

Why the purchase price is not a payback calculation

An investment of several tens of thousands of euros, for example, seems large at first. Whether it is cost-effectively sound, however, cannot be derived from that figure alone.

A machine costing €30,000 can be excellent commercially if it replaces high external and process costs every year.

A machine costing €15,000, by contrast, can be a poor investment if it is used for only a few hours a year.

The relevant question is therefore not:

How expensive is the machine?

But rather:

What economic effect does it produce over the planned period of use?

That sounds self-evident, but in investment decisions it is often cut short.

Comparisons such as the following are particularly problematic:

“External processing costs €150 per hour, so the machine has paid for itself after 200 hours.”

This calculation ignores the fact that in-house processing also incurs costs.

These include staff, energy, extraction, filters, maintenance, set-up, training and tied-up capital.

Conversely, costs of the old method that could be eliminated by the new process are often overlooked.

A realistic payback figure only emerges when both sides are considered in full.

Recording the current process in full

Before any calculation is made about new technology, the existing workflow should be documented.

An example:

A machine builder regularly has rust or coatings removed from components by an external service provider.

The current costs may then consist of more than the service provider’s invoice.

The following can also arise:

• Packing the components
• internal transport
• external transport
• Goods inwards and outwards
• Scheduling
• Waiting time
• Quality control
• Interim storage
• Rework

If components leave the premises for several days for this, an additional logistical buffer may be necessary.

In another company, the processing is carried out in-house by grinding.

Costs could then arise for:

• Grinding discs
• Working time
• Tool changes
• Extraction
• Cleaning
• Rework
• personal protective equipment

Only when the current process is fully known can it be judged which costs are actually replaced.

What costs arise with the new process

A laser-based process of your own also has running costs.

Typical items are:

• Purchase or financing
• Electricity
• Process extraction
• Filters
• Protective components
• Maintenance
• Staff costs
• Instruction and training
• Workplace organisation

With open high-power systems, the requirements of laser protection are added to this.

These items should not be talked down.

An investment decision does not get better by ignoring the costs of the system you want.

At the same time, a clear distinction should be made between fixed and variable costs.

The investment is incurred regardless of whether the system works ten or a hundred hours in a month.

Filters, energy and certain maintenance items, by contrast, depend far more on how much the system is used.

It is precisely this distinction that leads to the most important variable in the calculation: utilisation.

Utilisation as the decisive variable

The cost-effectiveness of an in-house system depends largely on how often it is actually used productively.

A machine that works several hours a day spreads its fixed costs over considerably more productive units than a system that is only needed twice a month.

The expected utilisation should therefore not be estimated optimistically.

It is better to evaluate existing data.

For example:

How many components were processed externally over the past twelve months?

How many hours did the previous in-house process take?

How many specific customer enquiries had to be turned down?

How many future projects are already foreseeable?

Such data makes it possible to draw up a more realistic usage forecast.

A common mistake is to build future additional revenue into the cost-effectiveness calculation in full, even though it is not yet secured.

Such opportunities may be considered – but they should be kept as a separate growth scenario.

Taking avoided external costs into account

Where work is currently contracted out, the service provider’s invoice is a clearly visible block of costs.

Even here, though, the calculation should be precise.

The following, for example, are relevant:

Annual external processing costs

plus

transport and handling

plus

internal organisation

plus, where applicable,

waiting times caused by external processing.

If this work is carried out in-house in future, not all of these costs disappear entirely.

After all, staff do not work free of charge.

But the difference between the old and the new process can form the basis for a payback calculation.

This analysis is particularly interesting for regularly recurring work.

A single large order rarely justifies a long-term investment.

A hundred similar orders a year can change the calculation fundamentally.

Calculating staff time correctly

Staff costs are often estimated too roughly.

An employee’s hourly wage is not the same as the actual operating cost of an hour worked.

For an internal calculation, a company would normally use an appropriate labour or machine hourly rate.

Even more important is the question of how much active operating time is actually required.

A process may take 30 minutes, for example, but require only 15 minutes of active operation.

Another process may be entirely manual and tie up an employee for the whole of the processing time.

With automated sequences, the calculation shifts again.

For industrial laser processes, Fraunhofer highlights precisely the importance of automation and integration into production chains.

For the payback calculation, a distinction should therefore be made between:

• Machine time
• active operating time
• Set-up time
• Inspection time

That yields a considerably more realistic cost structure.

Consumables and disposal

One advantage of laser-based processes can be that conventional blasting or abrasive media are not required.

That does not mean, however, that no consumable costs arise at all.

Filters, protective windows and other components have to be taken into account depending on the application and the use made of the system.

On the other side, the previous process may, for example, incur costs for:

• Blasting media
• Abrasives
• chemical media
• Cleaning agents
• Disposal of contaminated substances

Among the economic drivers of laser-based cleaning processes, Fraunhofer describes the reduction of cleaning media and of the volumes of waste requiring disposal.

The comparison should therefore be made on an annual basis.

Small individual amounts can add up to a considerable block of costs where usage is high.

Rework and quality costs

One of the most frequently underestimated factors is rework.

Suppose process A processes a component in 15 minutes.

Ten minutes of correction are then necessary.

Process B takes 20 minutes, but then delivers the approved condition immediately.

In that case B is faster across the overall process, despite the slower main processing step.

At the same time, quality problems can cause further costs:

• Scrap
• Rework
• reprocessing
• Production delay
• Complaints

For precision components, therefore, more than just the speed of material removal should be compared.

Actual productivity is the time taken to reach a stable final condition.

Fraunhofer ILT makes precisely this point in its assessment of modern laser productivity: low non-productive times, little rework and stable quality are as much a part of productivity as a high processing speed.

Downtime and transport

In maintenance, another cost factor can be considerably more important than the machine price: downtime.

If a production system cannot run, the result may be lost contribution margins, idle staff or delivery delays.

If a component has to be removed and transported off site for processing, this downtime can become longer.

Under certain conditions, a mobile in-house process can reduce such times.

That cannot, however, be claimed across the board.

An in-house laser process also requires set-up, a safety area and processing time.

The economic question is therefore:

How long is the system at a standstill with process A and how long with process B?

The actual material removal may account for only a small part of the total duration.

How a simple payback calculation is set up

A simplified calculation can start with the following logic:

Annual costs of the current process

• External services
• Staff
• Consumables
• Transport
• Rework
• other relevant process costs

Annual costs of the new process

• Staff
• Energy
• Filters and wear
• Maintenance
• other variable costs

The difference gives the potential annual saving.

Then:

Investment sum / annual net saving = simplified payback period

This calculation is deliberately simple.

Financing costs, depreciation, taxes and the cost of capital can additionally become relevant for a professional investment appraisal.

For the first technical decision, however, the simplified method provides an understandable guide.

Three utilisation scenarios instead of one forecast

Nobody knows future utilisation exactly.

It therefore makes more sense to calculate three scenarios.

Conservative

Only work that is already firmly in place today is taken into account.

Realistic

Tasks that are very likely to recur are included as well.

Growth

New orders or additional in-house applications are taken into account.

Ideally, the investment should not work only in the growth scenario.

If the payback is already convincing under realistic assumptions, the economic risk falls.

A spreadsheet with three scenarios is often more meaningful than a single, supposedly precise ROI figure.

Why a material test matters before the calculation

The greatest uncertainty in many calculations is the assumed processing speed.

If this figure is wrong, the entire payback calculation can be wrong.

A representative sample should therefore be processed before any larger investment.

The following are measured:

• processed area
• Process time
• Number of passes
• Quality of the final condition
• rework required

The technical differences between the various systems are already covered in the article Pulsed laser or CW: which energy input suits the component?.

For cost-effectiveness, one point above all is relevant here:

It is not the theoretical machine output but the real productivity on your own workpiece that belongs in the calculation.

Considering investment and process risk separately

A short payback period does not automatically mean that an investment is free of risk.

Questions such as the following should also be answered:

• How dependent is the process on a single employee?
• Are there enough recurring applications?
• How quickly can spare parts be delivered?
• What training is required?
• Is there an alternative process in the event of a failure?
• Is the intended quality reproducible?

Some of these points cannot be expressed directly in euros.

They are relevant nonetheless.

An cost-effectively convincing process should not merely be inexpensive; it should also work reliably in day-to-day operation.

Conclusion: payback starts with the existing process

When does a laser system pay for itself in day-to-day operation?

Not after some general number of months or operating hours.

Actual payback arises from the difference between the previous and the future overall process.

Particularly relevant are:

1. current external or in-house costs
2. actual utilisation
3. Operating and set-up time
4. Consumables
5. Rework
6. Transport
7. Downtime
8. real processing speed

Only once these values are known does an ROI calculation make sense.

A simple sequence is therefore recommended for companies:

First, measure the current process.

Then carry out a material test.

Next, determine the actual process time of the new method.

Only then set the investment against the annual saving.

Anyone wanting to calculate the payback of a laser system therefore sets the previous and the future overall process against each other. That turns a sales calculation into an operational investment decision.

Sources

• Fraunhofer ILT – “More productive with light” — Productivity is viewed as the interplay of cycle time, non-productive times, rework, quality and system integration.
• Fraunhofer Business Unit Cleaning – “20 years of laser cleaning” — Practical examples of process integration, doing without media and the economic use of laser-based cleaning.
• Fraunhofer IGCV / Fraunhofer IVV – ecological and economic assessment of industrial cleaning technologies — An examination of resource, energy and cost factors along industrial cleaning processes.

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