Businesses everywhere and across all industries are facing increased pressure to reduce costs, improve efficiency, and address persistent challenges like a shortage of available workers.
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So it’s not really a surprise that many operations managers are taking a closer look at ways they can introduce automation into their facilities and workflows. But for some, fears of high upfront costs hold them back from making changes that could have a virtually instant impact on productivity and efficiency—without adding new employees to the mix.
Automated guided vehicles (AGVs) offer a particularly flexible automation solution, often at a surprisingly affordable price point compared to other options, especially compared to human-operated equipment like fork trucks and pallet jacks.
At the same time, let’s not forget that total cost of ownership isn’t the same as purchase price. Maintenance, energy, human-operator related costs, insurance, potential damage to facilities and products…It's easy to see that TCO is a holistic value, not just a price tag.
In this article, we’ll take a closer look at key factors influencing AGV costs versus the traditional manual material handling methods most manufacturing and warehousing facilities rely on.
What Impacts the Cost of an AGV?
Several main factors influence the initial purchase price of an AGV:
- Payload capacity—How much weight can it move? Larger capacity equals higher cost
- Navigation technology—Laser, vision, inertial, and magnetic navigation systems can have widely varying costs
- Software—More robust software with additional capabilities typically adds cost (and sometimes, it’s capability overkill for the task at hand)
- Customization—Integration with existing software systems and specialized form factors or configurations can drastically increase costs
- Support options—Technical support, user and maintenance training, maintenance contracts, and extended warranties can all add cost
- Brand reputation—Established equipment manufacturers often command higher pricing
You probably also wonder if it’s cheaper to procure material handling equipment, such as AGVs, from overseas or U.S.-based providers. It’s a legitimate question that often requires a little digging beyond sticker price to determine an answer.
In the wake of global supply chain disruptions, experiences with shipping delays, mistakes, and rework have more North American facilities looking closer to home. While component costs may be higher, partnering with an agile OEM provider that’s within a time zone or two, and delivering over land and not by boat, can help control long-term total cost of ownership.
How Do AGVs Compare to Forklifts and Pallet Jacks?
Before diving into a side-by-side comparison, let’s not miss this significant fact: A basic AGV moves objects from point to point.
Lifting and placing objects on an AGV, and removing and placing items at their destinations, demand collaborative workers and/or handling equipment. Specialized AGVs can include some or all of the capabilities needed to lift, place, or transfer loads—and that, too, adds cost.
A basic AGV can make automation accessible at a much lower upfront investment than traditional material handling equipment.
The hypothetical, estimated values below help illustrate potential cost differences, though every customer's situation will be specific to their needs and operations:
Cost Factor
Basic AGV
Forklift
Pallet Jack
Initial Investment
$35,000–$45,000
(with support)
$25,000+
$500+
Annual Maintenance & Repairs
$3,000
$1,000
$50
Annual Operating Costs
$1,000
$2,500+
(fuel or charging)
negligible
Annual Depreciation
$15,000
$2,500
$50
That AGV has a higher upfront cost, but it quickly pays for itself by eliminating the ongoing expense of human operators—and those costs extend well beyond a worker’s wages.
How Human Labor Costs Impact TCO of Fork Trucks, Pallet Jacks, and AGVs
Adding up the full multi-year cost of human labor helps illustrate the value of automation to deliver efficiency, worker safety, and quality improvements that add up to…well, money.
The numbers below are hypothetical; real costs to an individual company depend on wages, benefits, and other variables unique to each business. This comparison assumes a facility runs three shifts.
Annual Cost Factor
AGV
1 Worker x 3 Shifts
Wages
None
$60,000+
Benefits
None
$12,000+
Training & Certification
$2,000
$4,000
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Don’t forget that an AGV can significantly boost productivity. Even moving at lower speeds, with no breaks, fatigue, or distractions, an AGV can carry significantly greater weights than any human worker, and at a consistent, steady pace. Precision navigation reduces errors—as well as the likelihood of lost-time accidents and damage to property and products.
And 24/7 operation means that even after shift workers call it a day, an AGV can keep moving tools, products, materials, dunnage, you name it. Workers can return to lines stocked and ready for maximum productivity the next day.
Keep in mind the added costs related to keeping human workers on a task. Increased risk of accidents can mean higher insurance costs—certainly, actual accidents result in major expenses. That makes accident-prone areas like blind corners, tight spots near conveyors, and densely-packed production lines ideal opportunities to automate and see a fast path to ROI.
How Long Does it Take for AGV Adoption to Pay Off?
For a facility operating two or three shifts a day, most companies can expect to recoup the initial AGV investment in under two years. Those running three shifts may realize full ROI in less than a year—and some see ROI for AGVs in just a couple of months. (Yes, really!)
Key factors influencing time to ROI include:
- Hours of operation—More shifts lead to faster payback
- Labor costs—Higher wages mean faster breakeven
- Productivity gains—Greater output equals increased revenue
- Safety impact—Reducing accidents, incidents, and lost time adds up to meaningful savings
- Flexibility—Basic AGVs that can be easily redeployed where needed most add agility value
- Quality improvements—Reduced errors and damage boost the bottom line
Eliminate Barriers: How You Can Pilot Test an AGV
Getting started with an AGV can be as simple as a rental option, which has the potential to keep costs well under capital expenditure thresholds. A rental option can enable you to “try before you buy” with a single AGV, over a period that enables your team to really evaluate outcomes and performance improvements. That, in turn, powers your purchasing request with the data you need to support your automation investment.
Starting small with a pilot AGV program is an affordable way to validate automation’s benefits for your specific application. Hands-on experience helps build familiarity and confidence to align stakeholders from workers on the floor to the C-suite, setting the stage for smoother transformations in the future.
Robot-as-a-Service (RaaS) options also open the door for introducing automation even in operations that don’t have their own robust IT infrastructure or department support.
That points to another key factor in successful implementation: solid, ongoing support from dedicated experts. Barcoding’s PreLive, GoLive, and StayLive Services™ deliver valuable, expert support every step from procurement through to end-of-lifecycle equipment refresh.
- PreLive advisory services can help build your business case and make the best possible procurement choices.
- GoLive assistance ensures minimally invasive installation, testing, troubleshooting, and training.
- And StayLive support can include multi-year maintenance contracts and parts availability to maximize uptime and extend the useful product life of Fred AGVs.
Ready to Take the Next Step with AGVs?
How about saving a few steps—or a few thousand? AGVs not only streamline workflows, reduce steps, increase consistency, and make work safer; they also present an economical material handling choice. For those who remember the AGVs of yore, it might be time for a fresh perspective on automation technologies.
Discover for yourself how today’s modern AGVs have evolved to meet the changing needs of the industrial workplace. Download our guide to start busting AGV myths that persist in your facilities.
The Automated Guided Vehicle, AGV, is getting increased attention across industries, especially within intra-logistics and manufacturing.
According to a report by Research & Markets, as a result of the Covid-crisis and increased interest in automated systems, the global market for AGVs is expected to grow to US$2.9 Billion by 2027, with a CAGR of 6.1% over the period 2020-2027. Experts in North America forecast a 15% CAGR growth rate within the next five years, displaying the rise of demand for AGV systems in material handling.
There are various reasons for this increased demand; however, the reduced cost of implementing AGV systems in operations is a primary driving force of interest.
In this article, we will dive into the following:
- AGV Product types and navigations
- Usage area of AGVs
- The cost of an AGV
AGV Product Types and Navigations
An operation’s decision on the type of AGV system to use depends on the desired tasks it should complete and the facility’s infrastructure.
Based on the various reasoning for implementing an AGV system in material handling operations, there are different types of AGVs to consider.
The three main types of AGV:
These are used throughout the entire production line and automate lifting and transporting pallets.
Have the ability to carry one or several units of load. They can also be referred to as Automated Guided Carts or AGC.
- Automated Towing/Tugger Vehicles:
Retain the ability to pull one or more non-automated vehicles, enabling the creation of a tugger train system. These commonly have a higher load/tugger capacity.
AGV Navigation
Just as there are a variety of product types, there are also different forms of AGV navigation.
Depending on the operations navigational systems, there are multiple ways for AGVs to navigate, all of which enable the vehicles to efficiently and safely move around the facility. The most common navigational technology used are:
A laser is used to navigate the vehicle through a positioning system accurately. The laser senses reflectors placed in the environment and can determine its position correctly using these points.
Interrail tape is installed, which guides the vehicle by allowing it to follow the implemented lines on the ground.
- Visually Guided Navigation
Cameras detect the surrounding area and navigate themselves using features within the facility.
The vehicle follows a mapped representation of the surrounding environments allowing the vehicle to operate independently.
What are AGVs used for?
How AGVs are used depends on the use case and the needs of end-users.
Most cases focus on handling materials by transporting, delivering, and storing different materials in warehouses, manufacturing, and logistic centers. They do so without human assistance, ensuring that the production lines are always accurately managed.
These systems are increasingly implemented in many industries, such as:
- Aerospace and Defense
- Automotive
- Beverage/Food
- Consumer Goods
- Healthcare/Pharmacy
- Industrial Goods Manufacturing
- Logistics
- Packaging
- Retail
- Others
No matter the industry, the innovative navigation systems which enable the vehicles to maneuver automatically optimize the processes of the operations.
What is the cost of an AGV?
It is important to remember that a wide variety of factors can impact the price of AGVs. These factors can include the complexity of the user case, the form of navigation, and the size of the lead that the AGV needs to transport.
Before investing in AGVs in your facility, there are some key points to consider that impact the cost: How many vehicles are needed? What kind of AGV should be used? How complex is the installation? What is the size of the vehicles? – all this will impact the cost of an AGV installation.
So let’s dig deeper into how you can estimate your AGV price.
Prices of Automated Vehicles
The price of a vehicle depends on the size and volume of vehicles needed.
Based on the main product types of AGVs as previously mentioned, AGV Forklift, Unit Load Vehicle, and Automated towing/Tugger Vehicles, there is a price range between $40.000 – $200.000 depending on the size, type of vehicle, load capacity, and navigational system.
AGV Forklifts have an estimated cost range between $75.000 and $200.000. This depends, of course, on the choice of product type and the project’s supposed weight, load, and complexity, such as if the AGV needs to operate in narrow aisles.
Unit Load Vehicles have an estimated cost of approximately $40.000. There is a high variety of these vehicles, also called AGC. The main aspects that estimate the price are the load and transport capacity and the installed navigation system. For example, the cost can differ a lot depending on if the vehicles can transport a load of 500KG (1,000lbs) versus 2ton (4,000lbs)
Automated Towing/Tugger Vehicles range between $50.000 – $85.000 depending on the navigation system and whether the product is semi-automated or fully automated.
The AGV: a cost-saving solution
Technological developments have enabled intra-logistic improvements by automating various functions in the warehouse and manufacturing processes, such as creating a safer work environment, reduced error rate, and increased accuracy.
The AGV is a cost-efficient modular automated solution. This is designed to provide solutions for every material handling process in your operations which alternatively is managed through human labor.
The top 3 benefits of the AGV
The AGV replaces equipment that previously needed human maneuvering, creating a more efficient process, and reducing waste and unnecessary costs.
- No increased costs over time
The cost/benefit balance of implementing AGVs is positive after one year to one year and eight months, depending on the complexity of AGV systems. Hence, the ROI period is short for AGV solutions.
- Elimination of replacing damaged products
Humans make errors, which often leads to equipment and materials being damaged during transportation—for example, running a forklift into products. The AGV has a high safety system whereby sensors are used to detect obstacles and hinder any collisions.
To learn more about AGVs read this post
Key Takeaways
How much the cost is for an AGV depends on the project, the product type of the AGV, load capacity, and the navigational system used but typically range between $40.000 – $200.000.
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