Last updated on August 2nd, 2023 at 01:43 pm
What does it really cost to buy and own a commercial ice machine?
If you’re a seasoned business operator, you’ve probably owned ice machines for years without looking too closely at what you’ve spent on them over time. You may know what you paid for your current ice equipment and what purchase price to expect of your next ice machine, but that initial cost is only the start of your spending.
Calculating the True Cost of Commercial Ice Machine Ownership
The total cost of ice machine ownership is the sum of two parts: the purchase price and the upkeep. Think of commercial ice equipment like your vehicle. Once you buy it, you still have to budget for ongoing maintenance and repair expenses that will come up as long as you drive the car. You could choose not to perform the recommended maintenance on your vehicle, but if you don’t change the oil, rotate the tires, and flush out the engine fluids when you should, eventually you’ll run into major problems that cost you much more than the maintenance would’ve. Even if you’re consistent about maintenance, car repairs are inevitable. Commercial ice machines are the exact same way.
Let’s take a closer look at the total cost of ice equipment ownership.
1. The Initial Purchase/Capital Costs
The most you’ll spend on your ice machine at one time will be the purchase price, which ranges from $5000-$10,000 for the most popular models. If you buy a machine that needs a bin, that bin will likely be sold separately. Most small and first-time business owners buy ice equipment with loan money, not cash, and if you do, you’ll be making monthly payments with interest for 2-3 years or longer.
Once you buy the ice machine, you’ll have to figure out who’s installing it and how much installation will cost. Even if installation is free through your foodservice equipment dealer or because you ordered an ice machine through an online retailer, you could eventually incur unintended costs from a bad installation or from choosing the wrong ice machine model. Badly installed ice machines need to be reinstalled, and the wrong ice machine model needs to be replaced with the right one. You’ll pay for both.
Most business owners believe that the purchase price represents 80% of ice machine ownership costs. In fact, it’s just the opposite: the purchase price is only about 20% of the total cost of ice machine ownership! The other 80% comes after you have the machine installed.
2. Post-Sale/Operational Costs
Post-purchase ice machine bills are inevitable. Manufacturers recommend a minimum of 2 professional cleanings a year, and sooner or later, every ice machine needs repairing. The average cost of a commercial ice machine repair in 2021 was $708.41—and some ice machine repairs can cost as much as $2000! Think your ice machine’s warranty will tide you over in the beginning? 80% of ice machine service calls made during the warranty period are not covered under warranty!
On top of maintenance and repairs, there are other post-purchase costs. If your ice machine breaks down completely, you’ll have to buy backup ice while waiting for your service company to fix the issue. And let’s not forget the utility bills. Ice machines use a lot of water and will also contribute to your electricity consumption. The average 600lb air-cooled ice machine—one of the most popular types on the market—uses an average of 44,000 gallons of water per year!
It goes without saying that any time you need to replace an old or broken ice machine, you’ll have to fork over the money for that initial purchase all over again. The average commercial ice machine only lasts 7-8 years due to the quality of maintenance it receives. With the best maintenance performed at the right frequency, ice machines can last 20 years!
If you buy your own, expect a lifespan closer to those 7 or 8 years, especially if you neglect the maintenance. Now, do the math: if you stay in business 20 years, you can expect to buy an ice machine 2 or 3 times. If your business grows significantly and requires more ice per day, you’ll have to buy a new ice machine sooner than you anticipated at some point in your business’ future.
Owning ice equipment will also cost you something even more valuable than money: your time. Instead of spending time looking for a trustworthy service company, making and tracking maintenance appointments, buying backup ice, and scheduling repairs when the ice machine breaks down, you could be spending time on any profit-generating area of your business. It’s easy to lose sight of that time cost, but in the big picture, time can’t be made back like money. The less of it you waste, the more successful you’ll be.
The classic business recommendation from finance experts states to earn back 10-30% for every capital dollar you invest. Ice isn’t something your customers pay for, and it’s not a reason they choose your business over the competition. That makes your ice machine a “non-value added” asset, and you won’t see even 5% return on investment (ROI) through it, let alone 10-30%. When you invest capital in a non-value-added asset like your ice machine, your value-added assets need to yield a higher-than-average return to compensate.
Sure, you can accept that you aren’t getting your money back on your ice machine investment—but the savviest business owners find every possible way to reduce their spending while maximizing their profits. Ice machine ownership just doesn’t fit into that strategy.
Why Isn’t This Common Knowledge?
If you do business in an industry where ice machine ownership is still the norm, you might be wondering why nobody’s talking about the real cost behind it. The truth is few people in the commercial ice machine industry understand the total cost and even fewer of them are paying attention to the numbers.
Once you buy an ice machine, the only way the manufacturer, your foodservice equipment dealer, and your ice machine service company make money is the machine breaking down and ultimately dying. Ice machine manufacturers and foodservice equipment dealers only profit from selling you equipment, so the sooner you must replace your ice machine, the sooner they profit again. For your service company, there’s some money to be made through performing routine maintenance, but pricey repairs are far more lucrative for them. It’s not that they’re trying to take advantage of you; they simply have no business incentive to track total cost of ice machine ownership and publish that data.
The only one who has your business’ best interests at heart is you. Instead of making the most common decision when it comes to your ice equipment, ask yourself what the wisest decision is.
Does buying and owning ice equipment make sense for your business financially? Is it your best option?
The Alternative: Renting
If your answer is no, the next question is how else can you provide ice to your customers?
The answer: rent your ice machine instead of buying it.
Let’s look at the advantages of renting your ice equipment:
- Little capital required upfront
- No interest payments
- All ice machine bills become tax-deductible Operational Expenses
- No need to care about machine depreciation
- Easier, cheaper ice machine replacement
- Minimal or no out-of-pocket maintenance and repair costs
- No need to look for an ice machine service company
Overall, renting your ice equipment is more affordable and more convenient than ownership. Most, if not all, ice machine stresses are the rental company’s responsibility, not yours. You don’t need thousands of dollars to get the ice machine installed, and you only invest the rental payments in it for as long as you actually use it.
Traditional Rent & Lease Options vs. Subscription
Deciding to rent your ice machine instead of buying it is easy. Choosing the best rental method, on the other hand, can be tricky. You can either go with a traditional rental or subscription. What’s the difference? Let’s find out.
Traditional ice machine rental and leasing options are usually offered through small and medium-sized local and regional companies.
Questions to ask about your local or regional ice machine rental options:
- What does it cover besides the equipment?
- Backup ice?
- Often, not all of these are included for free.
- How long is the estimated delivery time?
- Several weeks or months is now common with smaller rental companies, due to supply chain delays. How long can your business wait for ice?
- What ice machine brands, models, and ice types are available?
- Local and regional rental companies are likely to have a more limited selection
- What is the company’s customer service like?
- Do they only take calls Monday – Friday during bank hours? Do they work holidays?
An ice machine subscription is a unique type of rental solution provided at a national level. By default, it always includes equipment, maintenance, repairs, and backup ice. Because ice machine subscriptions are nationally available, you’ll have a wider selection of ice machine brands and ice types to choose from than you would with a local rental company, and you probably won’t have to wait as long for installation. National inventories are obviously bigger and more diverse than local and regional ones. Likewise, when it comes to customer service, you can expect national subscription providers to make themselves available to you 7 days a week and on holidays.
Ask your accountant or business advisor how ice machine rental can benefit you. If you’ve been running your business for a while now, consider asking your accountant to find out how much money you’ve actually spent on ice machine-related expenses since opening. The answer may surprise you!
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