CHAPTER 12. LIFE-CYCLE COST SUB-GROUP ANALYSIS 

TABLE OF CONTENTS 

12.1 INTRODUCTION ............................................................................................................ 12-1 

12.2 SUB-GROUP ANALYSIS ............................................................................................... 12-1 

12.2.1 Beverage Vending Machine Customer Sub-Group ........................................... 12-1 

12.2.2 Life-Cycle Cost and Payback Period Results for Manufacturing Sub-Group ... 12-2 

REFERENCES .......................................................................................................................... 12-5 

LIST OF TABLES 

Table 12.2.1 Mean Life-Cycle Cost Savings .......................................................................... 12-2 

Table 12.2.2 Positive Life-Cycle Cost Savings ...................................................................... 12-3 

Table 12.2.3 Mean Payback Period ........................................................................................ 12-3 

Table 12.2.4 Payback Period of Less than 3 Years................................................................. 12-4 

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CHAPTER 12. LIFE-CYCLE COST SUB-GROUP ANALYSIS 

12.1 INTRODUCTION 

The life-cycle cost (LCC) sub-group analysis evaluates impacts on any identifiable 

groups of customers of refrigerated beverage vending machines who may be disproportionately 

affected by energy conservation standards. The U.S. Department of Energy (DOE) accomplished 

this, in part, by analyzing the LCC and payback period (PBP) for those beverage vending 

machine customers that fall into any specific sub-groups. 

DOE used the LCC spreadsheet model to estimate the impact on beverage vending 

machine sub-groups. DOE developed this LCC spreadsheet model to conduct the LCC and PBP 

analyses for both beverage vending machine customers, as described in chapter 8, Life-Cycle 

Cost and Payback Period Analyses, of the technical support document (TSD). The standard LCC 

and PBP analyses for beverage vending machines include various types of businesses that use 

beverage vending machine equipment. The LCC spreadsheet model allows for the identification 

of certain sub-groups of businesses, which can then be analyzed by sampling only that subgroup. Chapter 8 explains in detail the inputs to the LCC spreadsheet model used in determining 

the LCC and PBP. The LCC spreadsheet model is available at 

www1.eere.energy.gov/buildings/appliance_standards/commercial/beverage_machines.html. 

12.2 SUB-GROUP ANALYSIS 

12.2.1 Beverage Vending Machine Customer Sub-Group 

DOE was concerned that increases in the purchase price of beverage vending machine 

equipment due to energy conservation standards could have negative impacts on businesses with 

relatively high financing costs and especially those that were small businesses (i.e., those with 

low annual revenues). In examining the seven categories of businesses in the chapter 8 analysis, 

DOE considered which categories would be likeliest to be adversely affected. Manufacturing 

facilities that own their own beverage vending machines are the likeliest businesses to be 

adversely affected since they had the highest financing costs for new equipment of any group of 

beverage vending machine owners (leading to the highest initial equipment cost) and faced the 

lowest electricity prices (thus showing the lowest value of energy savings). 

As a result, the LCC and payback calculations would be least favorable for this group. 

About 36 percent of all beverage vending machine units are placed in manufacturing facilities.1 

Based on this distribution of equipment and the distribution of ownership, an estimated 1.8 

percent of beverage vending machines are sold to manufacturing enterprises that place them in 

their facilities. Some of these entities are also small businesses. To identify small businesses, 

DOE used size standards from the Small Business Administration (SBA) to define which 

business entities are considered to be small. The SBA established size standards for types of 

economic activity, or industry, under the North American Industry Classification System 

(NAICS).2 

The SBA defines a small business from a customer perspective by either its annual 

receipts (i.e., revenues) or its number of employees. Manufacturing businesses are generally 

defined to be small if employment of the entire business is 500 persons or less. DOE does not 

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have sufficient information to correlate employment with the costs of more efficient beverage 

vending machines to identify the sub-group of small businesses in the manufacturing sample. 

However, DOE believes that the results from the LCC sub-group analysis provide an adequate 

indication of whether the small manufacturing businesses might be disproportionately 

advantaged or disadvantaged by a higher efficiency level for beverage vending machines. 

For purposes of this sub-group analysis, manufacturers are assumed to pay industrial 

electricity prices, which are somewhat lower on average than prices to commercial customers. 

However, the smaller independent entities may face somewhat higher costs of electricity. With 

the exception of the cost of capital and electricity prices, all other inputs to the LCC and PBP 

spreadsheet model for the manufacturing sub-group were the same as for all the business types 

considered in the refrigerated beverage vending machine energy conservation standards 

rulemaking (e.g., total installed costs, repair costs, maintenance costs, and equipment lifetime, 

etc). The lower the cost of electricity and the higher the cost of capital, the more likely it is that 

an entity would be disadvantaged by the requirement to purchase more efficient beverage 

vending machines. 

12.2.2 Life-Cycle Cost and Payback Period Results for Manufacturing Sub-Group 

Table 12.2.1 summarizes the LCC savings results for the small business sub-group for 

each of the beverage vending machine equipment categories, and compares them to the results 

for the total sample of business types used in the overall LCC analysis. 

Table 12.2.1 Mean Life-Cycle Cost Savings 

Trial Customer Type Equipment Category* 

Standard 2008$ 

Level A-L-IN A-M-IN A-S-IN B-L-IO B-M-IO B-S-IO 

(TSL) 

1 Manufacturers 59 115 92 28 26 20 

All Business 84 162 130 43 41 35 

2 Manufacturers 86 148 118 24 26 (10)** 

All Business 132 207 179 46 49 16 

3 Manufacturers 116 154 143 8 4 (10) 

All Business 184 235 227 40 36 16 

4 Manufacturers 137 190 158 (3) (8) (24) 

All Business 222 296 255 30 26 2 

5 Manufacturers 146 188 159 (590) (603) (649) 

All Business 244 305 265 (545) (558) (612) 

6 Manufacturers 134 171 142 (2,433) (2,251) (2,142) 

All Business 240 295 255 (2,414) (2,230) (2,129) 

7 Manufacturers (1,585) (1,302) (1,258) NA†

 NA NA 

All Business (1,481) (1,183) (1,153) NA NA NA *

 A=Class A equipment, B=Class B equipment, L=large size, M=medium size, S=small size; IN=indoor; IO=indooroutdoor.
 ** Numbers in parentheses indicate negative values. 

† Not applicable. There is no TSL 7 for Class B equipment. 

Table 12.2.2 compares the percentages of customers showing LCC savings for the two 

groups of businesses, namely, the small business sub-group (or manufacturers) and the total 

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sample of all business types considered for this beverage vending machine rulemaking. 

Similarly, Table 12.2.3 summarizes the mean PBP results for the two groups. 

Table 12.2.2 Positive Life-Cycle Cost Savings 

TSL Customer Type Equipment Category 

% 

A-L-IN A-M-IN A-S-IN B-L-IO B-M-IO B-S-IO 

1 Manufacturers 10 10 10 10 10 9 

All Business 10 10 10 10 10 10 

2 Manufacturers 97 100 99 75 73 37 

All Business 99 100 99 91 91 59 

3 Manufacturers 95 97 95 49 45 37 

All Business 97 99 97 73 71 59 

4 Manufacturers 95 97 95 41 39 27 

All Business 97 99 97 65 61 45 

5 Manufacturers 91 93 91 0 0 0 

All Business 97 97 97 0 0 0 

6 Manufacturers 83 89 83 0 0 0 

All Business 95 95 95 0 0 0 

7 Manufacturers 0 0 0 NA*

 NA NA 

All Business 0 0 0 NA NA NA * Not applicable. There is no TSL 7 for Class B equipment. 

Table 12.2.3 Mean Payback Period 

TSL Customer Type Equipment Category 

years 

A-L-IN A-M-IN A-S-IN B-L-IO B-M-IO B-S-IO 

1 Manufacturers 2.7 2.6 2.6 4.1 4.2 4.9 

All Business 2.3 2.1 2.1 3.3 3.4 3.9 

2 Manufacturers 3.8 2.4 3.6 5.7 5.8 11.9 

All Business 3.1 2.0 2.9 4.5 4.6 8.7 

3 Manufacturers 4.2 3.7 4.1 8.4 9.0 11.9 

All Business 3.4 3.1 3.3 6.5 6.9 8.7 

4 Manufacturers 4.4 4.0 4.3 9.9 10.5 15.5 

All Business 3.6 3.3 3.5 7.5 7.9 10.9 

5 Manufacturers 4.7 4.4 4.7 93.0 94.1 99.5 

All Business 3.8 3.6 3.8 83.8 85.4 94.7 

6 Manufacturers 5.3 5.0 5.2 100.0 100.0 100.0 

All Business 4.3 4.0 4.2 100.0 99.9 100.0 

7 Manufacturers 92.2 82.7 90.6 NA*

 NA NA 

All Business 83.8 71.0 80.9 NA NA NA * Not applicable. There is no TSL 7 for Class B equipment. 

Table 12.2.4 compares the percentages of the two groups experiencing payback periods 

of less than three years. Results are provided by TSL for each beverage vending machine 

equipment category. As is evident from the LCC and PBP results, although the LCC savings for 

small business are slightly smaller than for the full sample of businesses due to their higher 

financing costs, the overall effect of a potentially higher increase in cost for higher beverage 

vending machine efficiency levels on the small business sub-group is similar to the effect on the 

full sample of business types that use beverage vending machine equipment. Thus, small 

businesses are affected no differently by increased cost for increased beverage vending machine 

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equipment efficiency levels than the full sample of beverage vending machine customers 

considered in the rulemaking. 

Table 12.2.4 Payback Period of Less than 3 Years 

TSL Customer Type Equipment Category 

% 

A-L-IN A-M-IN A-S-IN B-L-IO B-M-IO B-S-IO 

1 Manufacturers 59 67 67 29 29 17 

All Business 85 87 87 45 43 35 

2 Manufacturers 29 73 37 7 7 1 

All Business 51 91 59 23 23 1 

3 Manufacturers 29 37 29 1 1 1 

All Business 41 55 47 7 5 1 

4 Manufacturers 25 29 29 1 1 1 

All Business 39 47 41 1 1 1 

5 Manufacturers 15 27 17 0 0 0 

All Business 29 39 33 0 0 0 

6 Manufacturers 15 15 15 0 0 0 

All Business 25 25 25 0 0 0 

7 Manufacturers 0 0 0 NA*

 NA NA 

All Business 0 0 0 NA NA NA * Not applicable. There is no TSL 7 for Class B equipment. 

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REFERENCES 

1. Automatic Merchandiser. 2007: Vending Becomes a Tougher Balancing Act. State of the 

Vending Industry Report. 2008. (Last accessed February 21, 2009.) 

<http://www.amonline.com/content/reports/files/0808_SVI_report.pdf> 

2. Title 13, Code of Federal Regulations, Chapter I - Small Business Administration, Part 121 - 

Small Business Administration, Subpart A - Size Eligibility Provisions and Standards. 

January 1, 2008. 

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