Buying vs. Renting Manufacturing Process Equipment
The economy is becoming very volatile. As a result, businesses are searching for ways to reduce expenditures. This trend is especially true for significant expenses like taking on additional equipment. In such a scenario, it is essential to weigh your options, which are leasing or renting machinery or making an outright purchase.
There is no clear answer on whether renting or buying manufacturing process equipment is better. With the following information, you can weigh your options and make the decision that is best for your business.
Analyze the Upfront Cost
The key advantage of renting industrial equipment is foregoing the initial cost of buying. For new businesses with limited capital, such a cut in expenses is helpful. Unlike outright buying, renting costs a fraction of the price. You would still be able to run your production line and make a large enough profit margin to eventually buy the equipment.
However, the cost of renting equipment adds up over the years. When rented long term, the cost could become more expensive than buying. If you choose to rent, ensure that the cost over time doesn’t surpass the cost of buying the equipment outright.
While buying equipment outright is expensive, it is a sound investment. The cost of renting equipment over several years might be higher than upfront buying. If the business does not perform as well as expected, you can recover your money by selling the equipment.
There are also several options that reduce the impact of buying industrial equipment. Instead of buying new equipment, you can buy high-quality refurbished machines. In most cases, these machines work as well as a new machine at a fraction of the cost. You can also buy your equipment from suppliers with flexible finance options. A reputable dealer will work out a payment plan that will not reduce your capital.
Consider the Long-Run Costs
Another advantage of renting over buying is the reduction in overhead expenses. Equipment renters are responsible for the quality of their machines. They provide repairs, servicing, and maintenance. They will also pay for storage and transportation of the machines to any site.
When you buy manufacturing equipment, you need enough storage space. Machines should always be protected from the elements to keep them in good working condition.
Manufacturing equipment also requires constant servicing and repairs. As they are in constant use, machine components are prone to wear and tear. To maintain the best output and prevent total failure, these parts need to be replaced. As the owner of the machines, you are responsible for these costs, which tend to add up as time progresses.
Consider the Length and Nature of the Manufacturing Process
Do you need specialized equipment to execute a one-off or short-term production process? If the answer is yes, you’re better off renting a machine than buying one. It makes little sense to pay the high cost for specialty equipment that will sit idle for extended periods.
Purchasing specialized equipment may be the better choice for companies with unpredictable needs. Unfortunately, renters can be unreliable. You cannot always count on them to have the equipment you need available. You may also encounter unforeseeable delays and need the rented piece of equipment for a longer period. As a result, you stand to pay a higher cost than expected, and your project might stall.
Besides, if you own your equipment, you can rent it out to other manufacturers when it’s not in use. That way, you can earn a little more money and have the machine available when needed.
As highlighted above, there is no clear answer for whether it is better to own or lease equipment. With the above information, you will be able to make the best decision for your company.
If you are still unsure which choice is best, do not hesitate to contact us. At Jaygo Incorporated, we sell and rent out top-of-the-range new and used processing equipment. Our seasoned professionals will listen to your concerns and recommend the best options.