Should I Rent or Buy Heavy Machinery?
Business decisions are never made easily, especially when they involve transactions such as purchasing expensive equipment. Whether you choose to rent or own, large machinery comes with a larger price tag. You know you want to keep costs low in order to turn the greatest profit, but it’s hard to determine which route will be the most profitable. If you’re debating on whether to rent or buy equipment, these tips might help you make the decision that best suits your needs.
When you’re trying to decide between renting and owning, it’s a good idea to get an understanding of the scope of your work. If your business’ clients typically aren’t local, it may be a better idea to rent your equipment in market rather than buy to avoid the costs associated with transporting large equipment.
On the other hand, if your business predominantly handles local projects, it may be more worthwhile for you to invest in building your own fleet. Having your own equipment might be more convenient if the distances between project locations is short, but could quickly become a large cost if you’re frequently having to cross state lines.
Owning your own equipment means you’re entirely responsible for its upkeep. While this means you don’t report to anyone or have to worry about getting machinery in time to complete project deadlines, it does mean that your wallet takes the hit when things go wrong. If an expensive part of your machine breaks, owning your machine means that it’s up to you, not the rental company, to replace the part. With some parts costing as much as $15,000 it’s important to plan for these kinds of expenses if you decide to purchase.
Renting equipment doesn’t mean that you’re completely off the hook maintenance-wise. While the rental company is responsible for maintenance and making sure the machine runs smoothly, the renter is required to perform daily maintenance tasks. Another perk is that the rental company also replaces broken parts that may have failed at no fault of the renter.
Competition from Other Companies
In terms of project competition, not having the necessary equipment readily available can result in business lost to companies that do. While rental companies have large quantities of machinery available for rental, their stock is not infinite. Some machines have waitlists that stretch out several months, and since rentals roll over, other businesses can choose to keep the machine for longer if they’d like.
While you shouldn’t face any issues typically when trying to rent equipment, you never know what will be available when you need it. Owning a fleet comes with its own competition issues as well. You may not own all of the machinery needed to complete a project, which may result in needing rentals to compensate for the equipment your personal fleet lacks.
Rental Purchase Option
If you really can’t decide what’s best for your business, the Rental Purchase Option (RPO) might be beneficial to you. Choosing an RPO means that while you’re renting the equipment, a portion of your fees are being put towards purchasing the machine. This gives clients the luxury of renting the equipment while allowing some extra time to decide if owning is the right decision.
Being able to put your rental fees towards purchasing the equipment also means that you won’t be spending extra money on rentals on top of your purchase. If you’re renting for so long that you’re already a quarter of the way vested towards a machine, you might as well put that money towards owning it.
Deciding whether to rent or own can be difficult, especially because there is no standard decision that fits every company. The scope, size, and budget of the company, among other factors, can help indicate whether renting or owning is a smarter business decision. The only “correct” decision as to whether to rent or own your equipment is the one that best suits your business.
No matter what you choose, Company Wrench is always there to support and serve you. Our goal is to help you reach your goals–not simply sell or rent you a piece of equipment. We want to see you succeed, so we’ll help evaluate your needs and make the right choice for you. Give us a call today at (740) 654 – 5304 for all your machinery needs.