After six years and $180,000 in cumulative spending on elevator maintenance across our portfolio of four mid-rise commercial buildings, I've learned one thing: the cheapest contract is almost always the most expensive choice. I'm a procurement manager for a property management firm, and since 2019, I've tracked every invoice, negotiated with over a dozen vendors, and built what I think is a pretty robust Total Cost of Ownership (TCO) model for vertical transport. The low bidder almost never wins in the long run.
Why does this matter? Because when you're managing a building, an elevator isn't just a machine; it's a revenue stream. A broken elevator costs you in tenant dissatisfaction, lost retail foot traffic, and emergency service call-outs. The price of the service contract is the tip of the iceberg.
How I Learned This
In Q2 2024, I compared the cost structure of our current vendor (a major OEM like Kone) against a smaller, independent company that was offering a 20% lower base rate. The independent firm quoted $4,200 annually for a full-coverage contract. Our Kone contract was $5,040. It looked like a no-brainer to switch.
Then I did the deep dive. I checked the fine print on the independent's quote, and analyzed our historical data from the Kone contract.
Here's what I found, and it's why I'll never switch solely on price again.
The Hidden Costs No One Talks About
The Fine Print Trap
The independent's contract had a list of 'non-covered' items. Basically, anything that wasn't a standard oil change or a routine inspection was a billable event. The first time a door sensor failed, it was a $450 service call. When a main drive belt needed adjusting, it was another $320. Under the Kone contract, those were included.
The Spare Parts Markup
This is where the OEMs like Kone actually make their money back. While the independent could do the labor, they had to buy parts from Kone or a third-party supplier. Their markup was 40% over wholesale. Kone, as the manufacturer, provided parts at cost or a very small margin under the service agreement. I found that over the course of a year, the independent's parts markup added $1,100 to my total bill.
The 'Cheap' Labor Problem
This is a bit of a stereotype, but I've seen it play out. The independent's technician was good, but he wasn't specialized. When our Kone EcoDisc elevator had a specific software glitch, he spent two days troubleshooting. A Kone-trained tech would have had the diagnostic tool and fixed it in two hours. That two-day labor charge was $1,600.
The Numbers: 17% Budget Overrun
So, how did the TCO stack up? Let's look at the full year projection:
- Independent Vendor: $4,200 (contract) + $450 (sensor) + $320 (belt) + $1,100 (parts markup) + $1,600 (software glitch) = $7,670
- Kone (OEM): $5,040 (full contract) = $5,040
That's a 52% higher cost for the 'cheaper' option. It blew a 17% hole in my annual maintenance budget.
The Kone Case Study: Efficiency as a Cost Saver
Switching to the OEM wasn't just about avoiding extra charges. It was about efficiency. Kone's digital monitoring system, which is part of their standard service, flagged a potential issue with a motor bearing three weeks before it would have failed. They scheduled a replacement during a low-traffic window. No downtime. No emergency call. That kind of proactive efficiency is a cost saver that doesn't show up on a quote.
What I mean is that the 'cheapest' option isn't just about the sticker price—it's about the total cost including your time spent managing failures, the risk of business disruption, and the potential need for major repairs.
When a Smaller Vendor Does Make Sense
I don't want to be totally biased. At least, that's been my experience with our buildings which are reasonably complex. For a very simple, standard hydraulic elevator in a small, low-traffic building, the independent might be fine—if you have a very large maintenance reserve fund. I've never fully understood how some property managers get away with the absolute cheapest service. Honestly, I'm not sure why some smaller vendors survive so long when the TCO is so obviously worse for complex equipment. My best guess is that many building owners don't track their costs this granularly.
The question isn't 'Which vendor is cheaper?' It's 'Which vendor has the lowest total cost of ownership?' If you're analyzing a $180,000 spend over six years, that 17% overrun is $30,600—enough to buy a new set of elevator doors for the lobby.
