Buying new cylinders and stamped manufacturer date

[MW1963]

It’s not exactly the same. You have to divide those costs by 54 not 60. Or you take into that someone else has got the benefit of 6 months at £2.65, so technically the cylinder should be £16 cheaper.

(And youre also assuming the secondhand price of a 5 year old cylinder is the same as a new cylinder)

Janos

PS. I would get out more but I’ve got accountancy exams in a couple of weeks.

I'd be pretty sure that certainly in the case of 'older dated' cylinders supplied to the trade by us, with a bit knocked off bearing this in mind, that a discount of £16.00 retail including VAT would not in the vast majority of cases be an issue!! We remain a relatively big player in the market and this may not apply to others...

In essence, the major issue and increasingly seems to be the case now, is that lots of newbies are learning to dive but not buying as much of their own kit as was usual. Granted cylinders have increased in price somewhat over recent years due to the metals market and currency fluctuations... From what I gather talking to Dive Centres in many parts of the world, this has become common place in what's known as the 'Go-Pro Generation'!!

[iain/hsm]

I'd be pretty sure that certainly in the case of 'older dated' cylinders supplied to the trade by us, with a bit knocked off bearing this in mind, that a discount of £16.00 retail including VAT would not in the vast majority of cases be an issue!! We remain a relatively big player in the market and this may not apply to others...

In essence, the major issue and increasingly seems to be the case now, is that lots of newbies are learning to dive but not buying as much of their own kit as was usual. Granted cylinders have increased in price somewhat over recent years due to the metals market and currency fluctuations... From what I gather talking to Dive Centres in many parts of the world, this has become common place in what's known as the 'Go-Pro Generation'!!

MW1963

Someone is telling you wrong.
Take the average aluminium price for raw material used in Luxfer scuba cylinders in 2016 was $1600 per tonne and the averaged out exchange rate 1.34 US dollar to GBP

2015 it was $1670 at $1.52 exchange
2014 it was $1900 at $1.65 exchange
2013 it was $1887 at $1.57 exchange
2012 it was $2050 at $1.23 exchange

To most folk that is a fall in pricing.

No matter add the average profit mark up from the factory this being a reasonable 20% from cost.

But then add the dive importer/distributor mark up and this adds another 60% to the cost (due to this figurative "metals market and currency fluctuations" you mention I guess LOL) But in reality it's a 60% mark up for sticking on a label and shipping out to the dive shops Parcel Farce.

The LDS adds another 33% to that cost including the delivery charge and the VAT man adds another 20% on the top.

Personally I think a year from manufacture would be reasonable.

[Ian_6301]

Depreciation is calculated by subtracting residual value from purchase cost.

If you plan on running it in to the ground, then the total purchase cost is amortised over the life of the asset, as residual value tends to zero.

If you sell it on, then the difference is amortised over the period of ownership.

You seem to be confusing opex and capex...

[Edward3c]

Depreciation is calculated by subtracting residual value from purchase cost.

If you plan on running it in to the ground, then the total purchase cost is amortised over the life of the asset, as residual value tends to zero.

If you sell it on, then the difference is amortised over the period of ownership.

You seem to be confusing opex and capex...

As an auditor I love these arguments over depreciation. Any time period is valid, what I look for is consistency of applying the calculations.

I discount my cylinders over an arbitrary 5 year period until they hit £25 (it is a figure I like, no other reason). their cost to my diving after that is just maintenance (running cost).

[Janos]

Depreciation is calculated by subtracting residual value from purchase cost.

If you plan on running it in to the ground, then the total purchase cost is amortised over the life of the asset, as residual value tends to zero.

If you sell it on, then the difference is amortised over the period of ownership.

You seem to be confusing opex and capex...

Exciting stuff this thread! However I can’t let a bone go!

Your original calculations implicitly assume that the value of a secondhand cylinder with a new test is the same as that of a new cylinder. It’s not. Technically you should factor this loss into your monthly ownership cost. (Admittedly not a big thing over the lifetime of the cylinder -perhaps 75p per month - hence my comment that I need to get out more)

But fundamentally, in your argument you’re spending £159 for the first 5 years of cylinder use vs £159 for 4.5 years of cylinder use. Clearly the first is better value (by around £16)

Janos

[Janos]

You seem to be confusing opex and capex...

Depreciation is opex, and appears as such in the SOPL. But as I say I need to get out more!

Janos

[Janos]

As an auditor I love these arguments over depreciation. Any time period is valid, what I look for is consistency of applying the calculations.

I discount my cylinders over an arbitrary 5 year period until they hit £25 (it is a figure I like, no other reason). their cost to my diving after that is just maintenance (running cost).

You need to get out more too! �� Even I don’t do that, as a) life is too short, and b) I have too many cylinders.

Janos

[Wibs]

I see Ian's point here: it's not a depreciation / amortisation question, it's more like calculating the cost of a membership.

There's fixed points of cost; 2 x o2 cleans, 1 visual+o2, 1 hydro+o2. Taken over a *long* period, it actually doesn't make much difference.

Example cost of ownership over 6 years:
* If the cylinder is bought 'new' this is one full set of tests.
* If the cylinder is 1 year old it's still one full set of tests although you do have to do them 1 year earlier.

So there's a cost of money which you're spending a year earlier, but the interest on ~£50 in a year is bugger all.

[gobfish1]

Well 16 quid will go a long way to paying for your next 2k diving holidays ffs

[graham_hk]

Well 16 quid will go a long way to paying for your next 2k diving holidays ffs

It never ceases to amaze me how much effort people will put in to save or claim back trivial amounts of money ...

If we combine all the time put into this thread I expect it'd sum more than 10 (new) cylinders haha

[graham_hk]

MW1963

Someone is telling you wrong.
Take the average aluminium price for raw material used in Luxfer scuba cylinders in 2016 was $1600 per tonne and the averaged out exchange rate 1.34 US dollar to GBP

2015 it was $1670 at $1.52 exchange
2014 it was $1900 at $1.65 exchange
2013 it was $1887 at $1.57 exchange
2012 it was $2050 at $1.23 exchange

To most folk that is a fall in pricing.

No matter add the average profit mark up from the factory this being a reasonable 20% from cost.

But then add the dive importer/distributor mark up and this adds another 60% to the cost (due to this figurative "metals market and currency fluctuations" you mention I guess LOL) But in reality it's a 60% mark up for sticking on a label and shipping out to the dive shops Parcel Farce.

The LDS adds another 33% to that cost including the delivery charge and the VAT man adds another 20% on the top.

Personally I think a year from manufacture would be reasonable.

Not a great deal of variation in US$ Al prices (http://www.infomine.com/investment/m.../aluminum/all/ ). Good luck picking a falling trend out of that and I also don't know where you got your 2012 exchange rate from ... Brexit has managed to make Us$ purchases more expensive though (by virtue of £ weakening). But the major cost of tank production is not raw materials (about ~£16 per Al80 using your figures) but rather the energy used to produce - which is why tanks are not made in the UK as our electricity is too costly.

As for 20%, 60% 33% - I don't know any tank brand following that model - or was this just another mum and pop witch hunt?

[Janos]

I see Ian's point here: it's not a depreciation / amortisation question, it's more like calculating the cost of a membership.

There's fixed points of cost; 2 x o2 cleans, 1 visual+o2, 1 hydro+o2. Taken over a *long* period, it actually doesn't make much difference.

Example cost of ownership over 6 years:
* If the cylinder is bought 'new' this is one full set of tests.
* If the cylinder is 1 year old it's still one full set of tests although you do have to do them 1 year earlier.

So there's a cost of money which you're spending a year earlier, but the interest on ~£50 in a year is bugger all.

How long is long (fnar, fnar). Over a suitably *long* period the purchase cost of the cylinder doesn't make much difference, but I don't see many dive shops giving away free cylinders

If I were to take Ian's side of the debate, then a better argument would be to say that a 20 year old cylinder with a new test is worth about £75, and so you've lost about £80 over 20 years, meaning that the depreciation is around £2 / year, and the 'lost' test is worth around £1. It's a little bit disingenuous though as most of that loss happens in the first few years....

Janos

PS - When someone joins Hellfins halfway through the year they only pay 6 months subs (both BSAC and Hellfins). I'm not sure I'd get away with charging people the full amount!

[Janos]

Well 16 quid will go a long way to paying for your next 2k diving holidays ffs

True. I think the OP is more annoyed by being given a short-tested cylinder after specifically being told they would have a relatively new one.

Janos

[Janos]

It never ceases to amaze me how much effort people will put in to save or claim back trivial amounts of money ...

If we combine all the time put into this thread I expect it'd sum more than 10 (new) cylinders haha

We should also include the cost of your time, costing our time, haha.

Now, back to my revision!

Janos

[Energy58]

When someone joins Hellfins halfway through the year they only pay 6 months subs (both BSAC and Hellfins). I'm not sure I'd get away with charging people the full amount!

The local golf club tried that for a while and wondered why no one joined after about March just so they could have a nice even price despite the fact they didn't sell any for half the year - I fear for humanity sometimes

Also depreciation is accountant's pretend money - all that really counts is what you actually pay in the stuff you can exchange for beer so a short test is a real cost as you will have 50 fewer beer tokens sooner. BTW I knew an accountant type who ran a fully-fledged household budget on a PC that went down to individual cost centres like "dog" - he was never able to give me a reply as to what happened if the dog overspent one month...