Industrial Equipment’s Lifetime Ownership Costs

By the editors at Reliable. Last updated October 7, 2026.

How We Evaluated

Independent editorial analysis based on publicly available government publications, federal regulations, and the original pages behind widely quoted cost splits.

Reliable Magazine does not sell equipment, software, or consulting and has no commercial interest in routing readers toward any particular vendor. Reliable does not accept payment for rankings. Vendors may sponsor enhanced listings with additional detail, but editorial rankings are independent. Read our editorial policy.

We sorted every figure into three tiers and kept the tiers apart:

• Government sources: DOE publications on compressed air, pumps, and operations and maintenance, a GAO report, and the federal life cycle cost regulation.
• Trade association and industry material: the Hydraulic Institute, an association of pump producers, with its stake stated at each use, and a CEATI compressed air reference guide hosted by Natural Resources Canada.
• Manufacturer and trade publication material: WEG, a motor manufacturer, with its stake stated at each use, and a Design News article about Baldor motors.

Three rules applied throughout. Each figure stays tied to its equipment type, study period, and assumptions. Nothing is summed or averaged across sources. A figure appears only if a named source page prints it, and our own arithmetic is labeled as arithmetic.

What Life Cycle Cost Means

The DOE, Hydraulic Institute, and Europump executive summary of Pump Life Cycle Costs (2001) defines the life cycle cost of any piece of equipment as the total lifetime cost to purchase, install, operate, maintain, and dispose of it.

The summary breaks the total into eight elements:

• Initial costs, including the purchase price
• Installation and commissioning
• Energy
• Operation, meaning the labor of normal system supervision
• Maintenance and repair
• Downtime and loss of production
• Environmental costs
• Decommissioning and disposal

The summary notes that the calculation excludes the raw materials a plant consumes in making its product.

FEMP’s O&M Best Practices Guide (Release 3.0, 2010) defines life cycle cost in financial terms: the present worth of all costs associated with a project.

Compressed Air: 76% Electricity

DOE’s Compressed Air Tip Sheet #1 (2004) includes a chart titled Typical Lifetime Compressed Air Costs in Perspective. It shows costs over 10 years:

• Electricity: 76%
• Maintenance: 12%
• Equipment: 12%

The chart’s note states an aggregate electric rate of $0.05 per kWh over 10 years of equipment life. The example assumes a 75 hp compressor operated two shifts a day, five days a week.

A 2007 compressed air reference guide prepared for CEATI, and hosted by Natural Resources Canada, prints the same split. It states that over the first ten years of a typical air-cooled compressor in two-shift operation, operating cost (electricity and maintenance) equals about 88% of total lifetime cost, and original equipment and installation account for the remaining 12%.

The guide reproduces the DOE split, so the two sources count as one example.

The same DOE tip sheet reports that compressed air generation accounts for approximately 10% of electricity consumed in a typical industrial facility, and 30% or more in some facilities.

The 76% figure belongs to this example. A plant with a different electricity price, operating schedule, or study period will see a different split.

Pumps: A Small Part for High Usage Pumps

What the DOE summary says

The 2001 executive summary states that the initial purchase price is a small part of the life cycle cost for high usage pumps. It gives several supporting figures:

• Pumping systems account for nearly 20% of the world’s electrical energy demand and 25% to 50% of energy use in certain industrial plant operations.
• Pumping systems often have a lifespan of 15 to 20 years.
• Energy may dominate the life cycle cost, especially if pumps run more than 2,000 hours per year.
• The cost of unexpected downtime and lost production can rival energy and replacement parts costs.

The summary includes a chart of typical life cycle costs for a medium-sized industrial pump with four labeled slices: initial, energy, maintenance, and other. The summary’s text gives no percentage split.

The Hydraulic Institute’s percentages

The Hydraulic Institute, an association of pump producers, publishes a percentage split for pumps. Its page states that over a 15 to 20 year lifespan, the initial price of a typical medium-size industrial pumping system is only about 10% of its total cost, compared with 40% for energy and 25% for maintenance.

A worked example from the summary

The executive summary works through one system with a failing control valve and compares four fixes over an 8-year project life. The example uses 6,000 operating hours per year, an energy price of 0.08 per kWh, an 8% interest rate, and 4% inflation. Amounts are stated in euros or U.S. dollars.

Option D has no initial investment and the highest life cycle cost. Option B has the lowest life cycle cost. This is one illustrative system, and the summary presents it as an example of the method.

Electric Motors: The 2% and 97% Claim

Two published claims put a motor’s purchase price at 2% to 3% of its lifetime cost.

WEG, a motor manufacturer, states that purchase price represents 2% of a motor’s lifetime cost and electricity more than 97%. Its article names no supporting study and supplies no specific operating schedule or study period for that split.

A February 21, 2005 Design News article about Baldor motors gives a separate illustration: 3% purchase price and 97% energy over 20 years of continuous operation at 7.5 cents per kWh. The article carries a staff byline and names no Baldor author.

These published claims have different levels of disclosed detail. Preserve each source’s stated assumptions when quoting its figures.

A Figure From Defense: 70%

GAO publishes one more ownership cost figure that readers may encounter: about 70% for operating and support costs. Its report GAO-26-108140 states that operating and support costs historically account for approximately 70% of a weapon system’s total life cycle cost. GAO lists repair parts, maintenance activities, contract services, and personnel within those costs.

The figure describes military weapon systems.

What the Federal Method Requires

Federal agencies follow a codified life cycle cost method for building energy and water systems, set out in 10 CFR Part 436, Subpart A. The regulation points to NIST Handbook 135, the Life Cycle Costing Manual for the Federal Energy Management Program, and to an annual supplement of discount rates and energy price projections.

Section 436.14 sets three assumptions that matter to anyone borrowing the method:

• Future cash flows are discounted to present value.
• The real discount rate is determined annually by DOE, subject to a floor of 3% and a ceiling of 10%.
• Study-period rules depend on the comparison. For retrofits, the period is the retrofit’s expected life or 40 years from the beginning of beneficial use, whichever is shorter. Mutually exclusive system alternatives must use a common study period under section 436.14(d), with appropriate replacement and salvage values.

The regulation governs federal buildings. A private plant sets its own discount rate and study period, and the federal method is a documented reference point.

Why the Percentages Move

The sources above use different lifetimes:

• 8 years in the DOE pump example
• 10 years in the DOE compressed air chart
• 15 to 20 years for pumping systems, per DOE and the Hydraulic Institute
• 20 years in the Design News motor example
• Up to 40 years under the federal regulation

They also use different operating hours and energy prices. The compressed air chart assumes two shifts and $0.05 per kWh. The Design News motor example assumes continuous operation and 7.5 cents per kWh. The pump example assumes 6,000 hours per year.

The DOE pump summary lists the financial inputs an analysis needs: present energy prices, expected annual energy price increase, discount rate, interest rate, and expected equipment life. It adds that the result is only as good as the information used.

Before quoting any split, state the equipment type, the study period, the operating hours, the energy price, and whether future costs were discounted.

At a Glance

Honest Limitations

• No cross-equipment statistic. The sources reviewed do not provide a single purchase-price share for industrial equipment as a whole, and this guide does not construct one.
• The compressed air split is an example. DOE’s chart rests on a 2004 illustration at $0.05 per kWh over 10 years, and the tip sheet presents it as a typical case. The 2007 CEATI guide repeats the same split.
• The Hydraulic Institute represents pump producers. Its 10%, 40%, and 25% figures appear on its own page, which does not describe the underlying data.
• The DOE pump summary prints no percentage split in its text. Its chart of typical costs is labeled by category only.
• The pump table is a worked example. It shows how the method ranks options for one hypothetical system.
• The motor splits come from a manufacturer and a trade publication. WEG names no supporting study or operating schedule. The Design News example assumes continuous operation for 20 years.
• The 70% figure describes weapon systems. It is included for readers who encounter it in ownership cost discussions.
• The federal rule covers federal buildings. Its discount rate limits and study period are a reference point for private plants.
• Several sources are old. The pump summary dates to 2001 and the compressed air tip sheet to 2004. Energy prices and equipment efficiency have changed since.
• Nothing is adjusted. This guide does not convert any figure for inflation, discounting, or current energy prices.

Frequently Asked Questions

What is the life cycle cost of industrial equipment?

A DOE, Hydraulic Institute, and Europump summary defines life cycle cost as the total lifetime cost to purchase, install, operate, maintain, and dispose of a piece of equipment. It lists eight elements: initial costs, installation and commissioning, energy, operation, maintenance and repair, downtime, environmental costs, and decommissioning and disposal.

What share of lifetime cost is the purchase price?

The sources reviewed do not provide one share that applies across industrial equipment. A DOE compressed air example shows equipment at 12% of cost over 10 years. The Hydraulic Institute, an association of pump producers, puts the initial price of a typical medium-size industrial pumping system at about 10% over 15 to 20 years. Each figure depends on the study period, operating hours, and energy price assumed.

How much of a compressed air system’s lifetime cost is electricity?

A DOE tip sheet shows electricity at 76% of lifetime compressed air cost, with maintenance at 12% and equipment at 12%. The example covers 10 years at an aggregate electric rate of $0.05 per kWh for a 75 hp compressor operated two shifts a day, five days a week. A different electricity price or schedule will change the split.

Is a motor’s purchase price really 2% of its lifetime cost?

That split appears in two published claims. WEG, a motor manufacturer, states purchase price at 2% and electricity at more than 97%, and its article names no supporting study or operating schedule. A 2005 Design News article about Baldor motors gives 3% and 97% for 20 years of continuous operation at 7.5 cents per kWh. Preserve each source’s stated assumptions when quoting its figures.

How long is the lifetime in a life cycle cost analysis?

It varies by source. The DOE compressed air chart uses 10 years. DOE and the Hydraulic Institute describe pumping systems as often lasting 15 to 20 years. The Design News motor example uses 20 years. Federal study-period rules vary by analysis. Comparisons of mutually exclusive system alternatives require a common period, subject to the regulation’s 40-year limit from the beginning of beneficial use.

What discount rate does the federal life cycle cost method use?

Under 10 CFR 436.14, federal agencies discount future cash flows to present value using a rate published in the annual supplement to NIST Handbook 135. DOE determines the real discount rate each year, subject to a floor of 3% and a ceiling of 10%. The rule applies to federal building energy and water systems.

Related Guides

• Pump Reliability and MTBF Statistics
• Deferred Maintenance Backlog Statistics
• Maintenance and Reliability KPI Reference
• Best EAM Software
• Maintenance and Reliability Glossary

Sources

• U.S. Department of Energy. Pump Life Cycle Costs: A Guide to LCC Analysis for Pumping Systems, Executive Summary (DOE/GO-102001-1190, January 2001, with the Hydraulic Institute and Europump; the compressed air tip sheet and FEMP guide are linked in the text).
• CEATI. Energy Efficiency Reference Guide: Compressed Air (2007; hosted by Natural Resources Canada; reproduces the DOE cost split).
• Hydraulic Institute. Pump Pros Know: Lifecycle Cost Analysis (association of pump producers; 10%, 40%, and 25% figures).
• WEG. Working Through the Electric Motor Replacement Maze (motor manufacturer; 2% and more than 97% statement).
• Design News. Energy Costs Should Drive Motor Selection (DN Staff, February 21, 2005; illustration discussing Baldor motors; 3% and 97% over 20 years of continuous operation).
• U.S. Government Accountability Office. Weapon System Sustainment, GAO-26-108140 (operating and support share for weapon systems).
• Electronic Code of Federal Regulations. 10 CFR Part 436, Subpart A (federal life cycle cost methodology; section 436.14).