Pricing: Is the UR10e too cheap or the UR20e too expensive?

The CEO of a large robotics company recently greeted me with the words that I had interesting theses. He shared many of them, but not others. This contribution is likely to divide opinion once again.

A few days ago I heard the first price indication for the new Universal Robots UR20e: about 48,500 €. Not only can it lift more than the proven UR10e (about 35,500 €), but it is also much faster and has other advantages due to its recent development. So there are very good reasons why the UR20 costs roughly 30% more than its little brother. The customer gets much more for his money.

It's time to write about pricing again, one of my favorite topics. There's hardly anything that makes it as "easy" to leverage profits as an optimized sales price.

The amortization calculation is less favorable

Let's assume that a company has two workstations where palletizing is done manually with the same cycle times. At workstation 1, 10 kg containers are stacked, and at workstation 2, 17 kg containers are stacked. The employees are paid the same. Both workplaces are subsequently automated, although the payback time for workplace 2 is significantly longer.

This shows that the argument of amortization times as the decision criterion is often not so true. The customer definitely recognizes the higher performance of the more expensive robot. Of course, some people will only buy the smaller cobot and accept the wear and tear on the employee at the more difficult workplace. However, the price of the cobot would not be lowered because of this. If you want to get all the orders, you usually have a yield problem. Because 100% surcharge is almost always at the expense of the sales prices.

Customer value and appreciation also play a role

I chose this slightly provocative example to draw attention to factors other than the pure payback period. This is especially true when talking to SMEs, where there are no such binding requirements from "above" as in corporate groups. In addition, having worked as a consultant for SMEs for decades, I know that SMEs in particular do not have extremely short payback periods. Typically, it is between a few and several years. After all, the return on sales is not that high for traditional SMEs. Ultimately, this is also logical: many companies have only 2 shifts, close between bridge days, etc.. I.e. the machine running times (i.e. the divisor) is not as high as in a fully utilized large company. The longer amortization periods are tolerated by most SMEs because the "water head" to be financed is not so large and cost blocks such as research or advertising are completely absent, especially for contract manufacturers.

Matching answer

So when a potential customer says "We need short payback times because the order only runs for 1 year", the answer should be "No matter what order comes afterwards, the Cobot can be used again. And if there are no more orders, it can be sold at worst." Then it's the customer's turn with a counter-argument.

On the initial question "too cheap or too expensive".

I think both models are too cheap, but I don't have to sell them. Also, as is well known, there are psychological price limits. This could well be 50 T€. I would like to emphasize that Universal Robots made the last price increase a long time ago. Since then, prices have risen significantly and it is foreseeable that wages (the basis for an amortization calculation) will increase significantly. Taking into account the increase in payload, the UR10e in particular has even become cheaper - and this in the face of strong demand. After all, a UR10e, for example, actually costs more than important competitors. Omron costs just as much, but includes a vision with good software and the Kassow Robots includes another degree of freedom. That a UR actually costs more can be argued with the fact that no other cobot has been tested so intensively in practice and has such a large eco-system. (Of course, FANUC can keep up with the test argument).

The fact that the price sensitivity of customers is sometimes overemphasized is supported by the fact that the Chinese suppliers in DACH are likely to remain insignificant. Although the fruitcore industrial robot is significantly cheaper than a Universal Robots, it stands for Made in Germany, just like igus. The risk of receiving poorer quality due to thriftiness is thus significantly reduced.

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The author of this blog is significantly involved in the AI/robotics project Opdra. He advises SMEs around robotics - up to 50% funding for consulting is possible. Permanently looking for interesting solutions, he has seen hundreds of applications. For this reason, his customers also include large companies that have know-how but do not know the entire market. You can find more about him here.