Maintain (Customer) Cost

In the customer life-cycle cost of a product, used to develop product and service innovations, the cost a Final Customer incurs to keep the product operating properly. The costs include obtaining maintenance service, parts, trained labor, plus only the costs the customer incurs due to product downtime.
(See also Acquire Costs, Dispose Costs,
Use Costs

)

Final Customer Purchasing from the Producer of the Product

Example 1:

Oil drillers are increasing their focus on drilling deeper wells. This is ideal for Hydril which creates premium connections for pipes to withstand extreme conditions, like deep water offshore wells and deep gas wells.
(Year 2005 – SIC 3441)

Explanation: Hydril, as a product producer, reduces the Final customers' cost of Maintain by creating products that can withstand extreme conditions.

Example 2:

Dell is targeting consumers and small and midsize businesses with its initial printer line. The company's main point of differentiation with rival printers is its automatic low-ink notification system and direct sales of ink cartridges. It hopes to attract customers on convenience.
(Year 2003 – SIC 3579)

Explanation: This producer of a product reduces the Final customers' cost of Maintain by warning the customer of maintenance needs and providing speedy sales service.

Example 3:

Verizon offers its customers a Worry Free Guarantee which has several features. One feature is customer support. Problems will be resolved during the first call to the service or they will get back to you with an answer quickly.
(Year 2003 – SIC 4800)

Explanation: This producer of a product reduces the customers' cost to Maintain by reducing the time the customers spend in getting the problem solved.

Example 4:

For a Satellite laptop PC that sells for just under $1,000, Toshiba charges $199 for a three year plan that also covers such accidental damage as dropping the laptop or spilling a liquid on the keyboard.
(Year 2004 – SIC 3571)

Explanation: This PC producer reduces the Final customers' cost of Maintain by offering an insurance policy that caps the customers' cost.

Example 5:

Intuit focuses on after-sale support, which means it has answers to questions on its Web site, chat rooms for tech help, and phone support for tax questions.
(Year 2003 – SIC 7372)

Explanation: This software producer reduces the customers' Maintain cost by offering prompt response to problems that arise as the customer uses the product.

Final Customer Purchasing from an Intermediary of the Product

Example 6:

Wal-Mart's Super Centers all feature a McDonald's and SuperTarget stores all feature a Starbucks.
(Year 2004 – SIC 5331)

Explanation: This Intermediary reduces the Final customers' Maintain cost by offering food while the customer shops, avoiding the customers leaving the store to eat.

Example 7:

Rent-A-Center promises free delivery and repair service within 24 hours.
(Year 1987 – SIC 5712)

Explanation: This Intermediary reduces the Final customers' Maintain cost by reducing the time and effort it takes to have the product repaired.

Example 8:

Fidelity Investments has recently launched an analysis tool to allow active traders to develop and test stock-buying strategies.
(Year 2005 – SIC 6211)

Explanation: This financial services Intermediary reduced the Final customers' cost of Maintain by reducing the time it takes to find good trading strategies and avoid bad ones.

Example 9:

AOL's version 6.0 allows e-mail listings to be sorted by date, sender, or subject. It's easier to sort mail into folders. The address book is much more powerful, and can now be printed out.
(Year 2000 – SIC 7375)

Explanation: This Intermediary reduced its Final customers' cost of Maintain by improving the customers' experience through training of its employees.

Example 10:

Most comparison-shopping sites include a vendor ranking based on buyer feedback.
(Year 2004 – SIC 7375)

Explanation: These internet-based Intermediaries reduced the Final customers' cost of Maintain by warning them of poor vendors.