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Ditch Witch Drills: A Case Study

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In the popular mid-range horizontal directional drill class, 20,000 lbs. – 50,000 lbs., Ditch Witch drills machine price average 10-20% higher than their sole domestic competitor. Purchased components are critical to the success of drill and historically account for nearly 50% of the unit cost. While sales of drills remain at a high level, at nearly 1,980 units per year from 2014 to 2016, the market characteristic of being an oligopoly allows competition to emphasize any difference where they excel, such as lower upfront cost of ownership. As with all products in today’s competitive purchasing environment, cost matters and with rising machine costs year over year due to purchased parts, even the most Ditch Witch loyal customers may possibly switch brands, which reduces sales, decreases market share and compromises the ability to win over customers from the other competitor.…show more content…
Currently, horizontal directional drills contribute to approximately 50% of Ditch Witch’s overall sales. From 2014-2016, the drill product line contributed an average of 54.3% of revenue to the organization, totaling nearly $453 million. While considered acceptable, the most recent drill project completed came in over $2,900 over the initial cost target. With an estimated annual production of 100 units, an approximate savings of $300,000 could be realized if the target could would have been met. With three new projects in the design pipeline and using the same percentage of target cost overage, an additional $521,000 could be
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