What Are Maintenance Costs? Strategies to Reduce Maintenance Cost

Keeping things running smoothly always comes at a price, whether it’s in a factory, an office building, or even your own home. Maintenance costs might not grab your attention right away, but they add up quickly and can take a big chunk out of your budget if not managed well. In this blog, we’ll take a look at everything you need to know about maintenance costs and how to manage them in a way that saves both time and money. Without waiting further, let’s get started.

What are Maintenance Costs?

Maintenance costs are the ongoing expenses that come with keeping a business up and running. These costs cover the care and repair of equipment, buildings, vehicles, and even the systems and tools used by your team. It’s not just about fixing things when they break. It also includes regular maintenance that prevents problems before they happen. From machinery on the floor to the software in your computers, maintenance plays a significant role in making sure everything works the way it should.

Who Tracks Maintenance Costs?

In most companies, the maintenance manager keeps an eye on these costs, usually with support from the finance team. But other teams are involved too. Depending on the size and setup of the business, you might also see:

• The maintenance team handling daily tasks
• The director of operations overseeing cost control
• The plant manager monitoring equipment and facility needs
• The facilities management team taking care of the building
• The IT team managing digital systems and software

These teams work together to carry out preventive maintenance, fix issues when they come up, and make sure safety standards are met.

Different Types of Maintenance Costs

If you’re thinking of starting a business or already running one, it’s important to understand that maintenance costs can be a major part of your budget. Here are some common types you might come across:

• Repair or replacement of machines and equipment
• Interior and exterior building maintenance, including paintwork, plumbing, and general wear and tear
• Servicing or replacing company vehicles
• Fixing or upgrading office furniture like desks, chairs, and storage units
• Safety-related costs, such as fire extinguishers, PPE, regular alarm checks, and compliance inspections
• Managing extra labor hours for urgent maintenance tasks
• Updating or repairing software and systems, often handled by the IT team

These costs may not always feel urgent, but staying on top of them helps prevent bigger problems down the line. It also keeps your business safe, efficient, and ready to grow.

How Are Maintenance Costs Calculated?

Maintenance costs are calculated by bringing together past records, real-time data, and specialized software. It starts with looking at historical data. This includes details like how many labor hours went into repairs, how often spare parts were used, and how frequently breakdowns happened. These records help spot patterns and give a rough idea of what to expect in the future.

Next, predictive tools come into play. These use technologies like IoT sensors and machine learning to check the current condition of equipment. Instead of waiting for a machine to fail, these tools help predict when it might need attention. That way, you can plan maintenance before problems get worse and avoid surprise costs.

Then there’s maintenance software like CMMS or ERP systems. These tools handle the heavy lifting by tracking labor, material usage, downtime, and costs. They automate scheduling, alerts, and reporting, making it easier to stay organized and reduce guesswork.

Common Metrics to Calculate and Track Maintenance Costs

1. Total Cost of Ownership (TCO): This gives a complete picture of how much an asset costs over its entire life—from purchase to disposal. It’s especially useful in industries where equipment is expensive and long-lasting, like manufacturing or healthcare.
   
   Formula: TCO = Initial Cost + Maintenance Costs + Operating Costs – Residual Value
2. Cost per Asset or Unit: This tells you the average maintenance cost for each individual machine or unit. It helps compare different equipment to see which ones are costing more to maintain.
   
   Formula: Cost per Asset/Unit = Total Maintenance Costs / Number of Assets
3. Mean Time to Repair (MTTR): This measures how fast your team can fix equipment when something goes wrong. A lower MTTR means quicker fixes and less downtime, which usually means lower costs.
   
   Formula: MTTR = Total Repair Time / Number of Repairs
4. MRO Costs (Maintenance, Repair, and Operation): This includes everything directly related to maintenance, like labor charges, spare parts, tools, and other consumables. Tracking MRO helps you control inventory and stay within your maintenance budget. Together, these tools and metrics help businesses understand how much they’re spending, why they’re spending it, and where they can improve. This leads to smarter planning, fewer breakdowns, and more reliable operations.

The Hidden Costs of Maintenance

Here are a few reasons that lead to high maintenance costs:

1. Poor Equipment Quality Leads to Bigger Problems: Let’s say you’re running a press machine with a loose belt. That small issue might seem harmless, but over time it leads to tiny defects in your products. These defects add up and can slowly damage your brand’s reputation. Customers start noticing the dip in quality, and before you know it, you’ve lost their trust. When machines don’t perform the way they should, it ends up hurting both quality and customer satisfaction.
2. Energy Bills Start Climbing: Think about an HVAC system that never gets its filters cleaned. Dirty filters make it harder for air to pass through, which forces the system to work harder. This extra effort shows up in your electricity bill. According to the Department of Energy, just replacing a dirty filter with a clean one can lower energy use by around 15 percent. If basic maintenance is ignored, you’re literally burning money every month.
3. Your Assets Won’t Last as Long: Compare two cars. One gets regular servicing like oil changes, tire rotations, and checkups. The other only sees the mechanic when something breaks. Naturally, the first car will last longer and run better. The same logic applies to your machines. When regular maintenance is done, the lifespan of equipment increases. Research shows that customers who stick to a maintenance schedule have seen their assets last around 16 percent longer on average.
4. Downtime Eats into Production Hours: When machines break down, production stops. That’s downtime, and it can be extremely expensive. In manufacturing especially, every minute of halted production means lost revenue. Some companies lose thousands or even lakhs per hour when operations are down. Regular maintenance helps avoid these interruptions and keeps work flowing smoothly.
5. Wasting Time and Resources: Machines that aren’t well maintained often become unreliable. They are harder to use, break more often, and waste valuable resources. On top of that, they can lead to defective products which have to be reworked or scrapped. This drains not just materials but also your team’s time and attention, pulling focus away from more important tasks.
6. Damage to the Environment: Machines that run inefficiently often use more energy and release more pollution. Over time, this not only adds to your bills but also affects your company’s environmental footprint. If you’re trying to follow green practices or meet sustainability goals, poor maintenance will push you in the opposite direction. It also creates a workplace that’s less healthy for employees.

Smart Ways to Bring Down Maintenance Costs

Cut Out Unnecessary Repetitive Tasks

Many companies unknowingly waste time and money by doing preventive maintenance more often than necessary. Studies show that nearly 30 percent of such tasks are overdone. Not every machine follows a predictable pattern when it breaks down. Unless you’ve tracked a clear maintenance schedule based on usage cycles or specific time intervals, you might be spending resources on work that isn’t needed.

Fix the Root Cause, Not Just the Problem You See

It’s easy to patch up issues as they show up, but real savings come from digging deeper. If a machine keeps breaking down, treating the symptom won’t stop it from happening again. You need to identify what’s really causing the issue. Whether it’s poor installation, the wrong parts, or operating errors, solving the actual problem helps avoid repeated repairs and saves money in the long run.

Streamline Your Work Orders

When technicians know exactly what they need to do, they can get started right away without wasting time. A well-organised work order should list the tools required, protective gear, and a clear description of the task. You can also use location tracking to assign jobs to the nearest technician, cutting travel time and speeding up repairs.

Reduce the Need for Reactive Maintenance

Emergency repairs cost more, take longer, and pull resources away from other important tasks. In fact, unplanned maintenance can take three to nine times longer to complete. Shifting to a more proactive approach by scheduling regular checkups helps prevent surprises. It also keeps your workflow smooth and your costs under control.

Review and Renegotiate Supplier Contracts

You might be able to cut your maintenance expenses by up to 5 percent just by reviewing your supplier contracts. Look closely at the terms. Are you paying for services you don’t fully use? Can you bundle multiple services for a better rate? There’s often room for negotiation if you take the time to look.

Understand the Lifecycle of Your Assets

Every piece of equipment has a lifespan. If a machine keeps needing repairs, it might be cheaper to replace it than to keep fixing it. Knowing where each asset stands in its lifecycle helps you decide when to repair, refurbish, or replace. This way, you’re not throwing money at equipment that’s already nearing the end of its usefulness.

Focus on Preventive Maintenance

One of the most reliable ways to reduce maintenance costs is to avoid breakdowns in the first place. Preventive maintenance helps spot issues early and keeps everything running smoothly. It also keeps your business from slowing down or stopping altogether due to unexpected repairs. A good preventive strategy, supported by a facilities management tool, can help schedule tasks, monitor progress, and track maintenance history more efficiently.

Keep an Eye on Spare Parts Inventory

Delays in repair often happen because the needed parts aren’t in stock. To fix this, try using similar equipment across your facility so parts can be shared between machines. You can also cut costs by buying spare parts in bulk. Having interchangeable parts and a solid stock management system keeps everything moving faster and cheaper.

Reduce Daily Waste in Operations

Maintenance work often gets delayed due to small inefficiencies. Technicians may spend more time waiting for approvals or searching for tools than actually working. Use data from your maintenance software to identify bottlenecks and make everyday tasks flow more smoothly.

Manage MRO Inventory More Effectively

Maintenance, repair, and operations inventory can quietly eat up your budget if not managed properly. Use past data to forecast what tools and parts you’ll really need. This avoids unnecessary purchases and keeps your storage areas clean and efficient. Better inventory management also leads to better planning and quicker responses.

Train Everyone, Not Just the Maintenance Team

Your technicians aren’t the only ones responsible for catching problems. Training your entire staff to spot early signs of trouble can help you fix things before they get worse. When more people know what to look for, you reduce the chances of major breakdowns and save on expensive fixes.

Use Technology That Fits Your Needs

Manual tracking with pen and paper won’t cut it anymore. Good technology helps you stay organised and in control. A facilities management platform or a computerized maintenance management system helps you stay on top of all tasks, reduce manual errors, and keep things running without unnecessary delays.

Extend Warranties and Use Insurance Wisely

No equipment lasts forever, and repairs can be expensive. If you’re working with costly machines, consider extending their warranty or insuring specific parts. Talk to your technicians to figure out which machines or components are worth covering. A good warranty or insurance plan can save you from high repair bills later.

Cut Down on Maintenance Costs with NEXGEN CMMS

Keeping track of maintenance costs doesn’t have to be a hassle. Instead of sorting through endless Excel sheets, invoices, or old work orders, you can simplify the entire process with a Computerized Maintenance Management System (CMMS). NEXGEN’s advanced CMMS software makes it easier to manage maintenance from start to finish.

With NEXGEN, you can automate your maintenance schedules, track your assets in real time, and use predictive maintenance tools to catch issues before they turn into bigger, costlier problems. It also helps you manage your inventory more efficiently, so you’re not overstocking or running short on parts. All of this adds up to reduced downtime, fewer emergency repairs, and a much clearer picture of where your money is going.

Frequently Asked Questions

1. Who handles maintenance cost tracking?

   Maintenance managers are usually the ones in charge of tracking maintenance costs. Finance teams, facility managers, and sometimes operations or procurement departments also play a role. Even maintenance technicians may be involved in recording costs.

2. How do teams track maintenance expenses?

   Most teams use tools like CMMS software to log maintenance activities and costs. They track performance using KPIs, review past data, and analyze trends to plan future spending. This helps in keeping costs under control and identifying areas for improvement.

3. What are the advantages of tracking maintenance costs?

   Tracking these costs helps teams reduce unnecessary spending, make better decisions, and manage equipment more effectively. It also improves efficiency and gives you more control over how resources are used.

4. How does predictive maintenance reduce costs?

   Predictive maintenance tools help spot potential issues before they lead to breakdowns. This means maintenance can be scheduled at the right time, avoiding expensive emergency repairs. It also helps teams plan purchases more wisely and prevent unexpected delays.