Return on Investment (ROI) is a measure of the gain (preferably) or loss generated relative to the amount of money that was invested. ROI is typically expressed as a percentage and is generally used for financial decisions, examining the profitability of a company, or comparing different investments. It can also be used to evaluate a project or process improvement to decide whether spending money on a project makes sense. The formula is shown below-
A negative ROI says the project would result in an overall loss of money
An ROI at zero is neither a loss or gain scenario
A positive ROI is a beneficial result, and the larger the value the greater the gain
Example – installing a Super Air Nozzles (14 SCFM compressed air consumption) in place of 1/4″ open pipe (33 SCFM of air consumption consumption) . Using the Cost Savings Calculator on the EXAIR website, model 1100 nozzle will save $1,710 in energy costs. The model 1100 nozzle costs $42, assuming a $5 compression fitting and $45 in labor to install, the result is a Cost of Investment of $92.00. The ROI calculation for Year one is-
ROI = 1,759% – a very large and positive value. Payback time is only 13 working days!
If you have questions regarding ROI and need help in determining the gain and cost from invest values for a project that includes an EXAIR Intelligent Compressed Air® Product, feel free to contact EXAIR and myself or one of our Application Engineers can help you determine the best solution.
Sound levels and ROI don’t immediately link together in a quick thought. Unless you are me and things seem to link up that don’t always go together, like peanut butter and a cheese burger. (Trust me, just try it, or if you are near West Lafayette, Indiana just go try the Purvis Burger across the street from Purdue University.) The truth behind tying sound levels being reduced and ROI together is actually pretty simple.
For this example, I am going to stay fairly high level as we could get into some pretty deep measurements of what exactly could be a cost savings. If we reduce the sound level being generated by point of use compressed air products that is easiest to do by implementing engineered blow off products as well as reducing the operating pressure. Let’s use this example: A 1/4″ copper tube that is being used as a blow off will give off a noise level of over 100 dBA from 3′ away. The table below shows that at an 80 psig inlet pressure the same tube will also consume 33 SCFM of compressed air.
By installing a model 1100 1/4″ FNPT Super Air Nozzle on the end of this copper tube, we reduce the noise level generated by the blow off to 74 dBA. This measurement is at the same 80 psig inlet pressure and from 3′ away, which is well below the OSHA standard for allowable noise level exposure. This also gives a broader more defined pattern to the air stream which may permit a reduction in compressed air pressure.
The other factor this changes is that the air consumption is reduced by 19 SCFM of compressed air which then results in energy savings. This ultimately ends in a simple ROI equation where we are simply using the compressed air reduction as the only variable for the return.
By reducing the air consumption of a process that operates 24/7, 250 days a year that equates to a savings of 6,840,000 SCFM per year and that equates to $1,710.00 USD. This does not account for any reduction in paying for hearing protection that may no longer be needed, or increase in production because the application functions better.
So you see, reducing noise levels in a facility can easily amount to a sizable cost savings in energy going towards compressed air consumption. If you would like to walk through any potential applications, please contact us.
This week in Cincinnati we hit a record high 79°F. Since less than a week earlier it snowed all afternoon, let’s just say many people around here began to get excited. While I don’t mind a little snow here and there, once February begins to draw to a close I’m ready to bust out the shorts, tank tops and flip flops and bring on some warmer temperatures. It also means I’m right around the corner from opening up the pool. Let’s hope that goes much smoother than last year….
Another benefit to the warmer temperatures, especially here in Cincinnati, is the coming of the baseball season. With the Reds Spring Training also starting this week, optimism is in the air (albeit reserved after the last few years performance).
Unlike baseball where it’s 3 strikes and youuuu’rrrreeee out! EXAIR’s unconditional 30 day guarantee for all stock products allows you the opportunity to test out several different solutions to ensure you get the right product for your application.
I recently worked with a customer that was interested in switching their current blowoff process with something that would reduce their sound levels but still allow them to complete the job in a similar time frame. The company makes aluminum castings and was using the air gun to remove residual sand leftover in the die after each cycle. Their current air gun was producing sound levels at 107 dBA, well above OSHA’s safe operating range for a full 8 hour shift of work according to OSHA 29 CFR 1910.95(a).
They didn’t want to commit to just one style of air gun, so he purchased a 1210SS-18 (Safety Air Gun w/ ¼ NPT Stainless Steel Nozzle and 18” extension) and a few different additional ¼ NPT nozzles to see which style his operators preferred. After some testing, they concluded that the air gun with an 1122SS 2” Flat Nozzle installed provided them with the best results. Having the added feature of changing out the shim to increase/decrease the force and flow was also welcomed. They’ll be returning the extra nozzles and applying the credit to the purchase of some new 1230SS-18 guns to outfit their other work stations.
While we do have a highly trained team of Application Engineers ready and available to help you determine the most suitable product, sometimes testing it out at your facility is the best way to ensure a positive result. That is EXACTLY why we give you 30 days to test out any stock product. If for any reason at all you’re unsatisfied with the performance, give us a call and we’ll arrange for a return. Don’t be afraid to swing and miss!
ROI or Return On Investment is a way to gauge the productivity or profit/loss from money spent on an investment. In business, companies will use this information to determine if a project or investment is worth the risk, ultimately leading to a net profit gain as the end result.
In my own personal experience, my wife and I were considering buying into a timeshare vacation property a few years ago. To enter into the agreement, the company required a $ 22,000 “buy-in” (financed of course) and a recurring cost of approximately $60/month for the next 22 years. This would have afforded us 124 “points” for nightly stays on our planned vacation. Their timeshare rentals are tiered into different room types – Studio, 1 bedroom, 2 bedroom or a 3 bedroom villas – with each room type costing a certain amount of points. For us to maximize the length of our stay, we would have to select the studio room which would have given 6 nights at a total of the 124 points.
We have visited this popular vacation destination several times so we know what the average cost is to spend a week on property and purchase theme park tickets for our stay. When we booked on our own, we spent on average a little less than $ 3,000 for 7 days which included our room each night and 6 day park passes per person.
The timeshare rental cost was just for the nightly stay, it didn’t include any park tickets, food or other recreations. On average, the cost for 6 days worth of park passes per adult is close to $ 450.00 and per child it was around $ 400.00. Considering there are 2 adults and 1 child (at the time) we had to pay an additional cost of $ 1,300.00.
So if we joined the timeshare and stayed for 1 week once a year, it was going to cost us approximately $ 3,020.00 ($ 1,720.00 (timeshare cost) + $ 1,300.00 in tickets). In this case, it was actually going to cost us MORE in the long run than if we booked a yearly vacation on our own (< $3,000), leading to a negative ROI. (not to mention, I really didn’t want to commit to the same vacation for the next 22 years!).
When discussing replacement compressed air blowoff solutions with a customer, many times they look at the purchase price of the device and question if it’s worth it for them to make a change. If you follow along with our blog, you will notice that over the last few months we have submitted several different entries relating to this topic, like replacing drilled pipe with our 12″ Super Air Knife resulting in a 47 day ROI or where a customer replaced 4 open copper tubes with our 1110SS Nano Super Air Nozzle and recurring their expenses in just 38 days. In these instances, we show the calculations in regards to the true cost of ownership and how quickly you can recover capital funds when considering the whole scope of the project.
At EXAIR, we are committed to providing Intelligent Compressed Air® Products that reduce compressed air consumption leading to a more efficient process, as well as increasing operator safety. If you are considering an EXAIR solution for your current process but have questions about price or performance, contact one of our application engineers for assistance.