Construction businesses have an integral decision to make when securing equipment for their projects — buying or renting the machines. This choice requires you to examine several factors, including your budget, project requirements and overall business needs.
Explore some essential considerations when deciding to rent or purchase, including cost, technology and scalability. After reading this in-depth comparison guide, you'll be well-equipped with the knowledge to make an informed decision.
Evaluating the Cost Benefits of Buying vs. Renting Construction Equipment
Cost is a key consideration when choosing to buy or rent equipment. Let's look at the financial benefits and shortcomings of both options:
Pros and Cons of Renting
Renting construction equipment involves a lower upfront fee than purchasing. This perk makes renting ideal if you have budget limitations or short-term project needs. Rather than taking on the full cost of buying construction equipment, you can pay only for the duration you need it. Most rental agreements also factor in maintenance expenses, so, unless damage occurred due to user negligence, you likely won't be responsible for servicing costs if repair needs arise.
However, you have to think about the big picture. Renting can be a cost-effective short-term option, but the costs of frequent or long-term rentals can snowball over time. In some cases, they can exceed the expense of purchasing the equipment. If you find that you require the same rental machine for multiple projects and your equipment needs are steady, buying the equipment could make more financial sense.
Pros and Cons of Purchasing
While it's not always feasible for small startups with budget restrictions or temporary equipment requirements, buying construction equipment can be practical if you have recurring project needs. Plus, once you pay off the initial purchase cost, the equipment can become an asset that boosts your company's value.
Remember — purchasing equipment is a long-term investment. Expenses will continue to roll in long after the initial transaction. You'll also have to budget for equipment maintenance, subscriptions, repairs and storage.
Additionally, owned equipment depreciates, potentially lowering its resale value. However, the upside is you may be able to take advantage of tax breaks. Both rental and owned equipment qualify for business tax deductions. However, because owned equipment depreciates, you can exercise Section 179 of the tax code. This code states that you can write off the equipment during the year you purchased it, accelerating the benefits of depreciation.
Staying Ahead With Technology Upgrades
Construction equipment manufacturers are constantly rolling out new technologies and capabilities to enhance operator comfort, efficiency, precision and performance. When deciding between renting and purchasing, determine how important these features are to you. Here are the pros and cons of both options through the lens of modern equipment technology:
Pros and Cons of Renting
One of the most significant benefits of renting construction equipment is the ability to try before you buy. You can test drive newer models with modern features and built-in technology, such as remote monitoring, predictive analytics or grade control.
Even if you don't have a time-sensitive project coming up, you can rent a solution for a couple of days simply to experiment with different features. This can help you identify key qualities to look for if you eventually choose to purchase.
However, keep in mind that different rental companies offer varying selections. Some rental inventories may have limited options, only offering older models with limited capabilities. If modern features are nonnegotiable for you, consider renting from a dealer with an extensive selection and newer models.
Pros and Cons of Purchasing
When purchasing equipment — especially new units — you can typically access the most up-to-date features and technologies with ease.
Manufacturing and technology trends frequently evolve across numerous industries, including construction. Working with older, outdated equipment can risk your business's competitive advantage. By investing in new equipment with cutting-edge technologies, you can better adapt to changing business and customer needs, increasing productivity and revenue.
Older equipment can pose hazards to operators, even when well-maintained. If a worker or contractor is injured on the job due to technology failure, your business could incur workers' compensation costs and other expenses. New equipment integrates sophisticated technology like security controls and anti-theft features.
However, remember that when you own equipment, keeping up with technological advancements may require periodic upgrades to maintain competitiveness. Many manufacturers are beginning to include these upgrades in annual subscriptions, so be prepared for annual, ongoing costs.
Scaling Projects With Flexibility
Every project varies in size, complexity and scope, and business needs are constantly growing and evolving. As such, it's important to have equipment that meets your changing requirements. Here are some of the benefits and drawbacks of purchasing and renting equipment in terms of scalability:
Pros and Cons of Renting
Rental equipment can provide scalability for fluctuating project demands. You can quickly obtain the right equipment when you need it, letting you adapt to changing project specifications and client demands.
Additionally, you can accommodate temporary needs for specialized projects or seasonal demands. You can also easily upgrade models, avoiding the risk of owning outdated or obsolete equipment.
However, limited availability can present challenges in scaling your operations. For instance, if the rental company doesn't currently have the specific unit you need, it could lead to project delays and downtime.
Pros and Cons of Purchasing
Owning equipment is a viable, cost-effective option when you have consistent project types and steady needs. You also aren't under the constraints of rental agreements — you have complete flexibility to use the equipment whenever needed. Plus, owning equipment allows you to customize it to your needs.
However, purchasing equipment means you could eventually have an obsolete unit on your hands. The longer you own it, the more it depreciates. If your project requirements grow more complex over time, you may need to invest in costly upgrades or sell the unit for a newer, more feature-packed model that can meet your demands.
Can You Do Both?
Depending on the variability of your business, it may make sense to purchase a minimum number of technology systems that you know you will use consistently on projects. As business increases, adding a rental system to your project to complement your owned gear gives you the flexibility to temporarily scale operations as needed. Be aware the rental system(s) will need to be compatible with your purchased gear (software versions, etc.) to ensure there are no issues with implementation.
Making the Decision: Renting vs. Buying
Now that you know the pros and cons of buying and renting equipment, you can make a more sensible decision for your business. Generally, renting equipment makes sense when:
- You have sporadic, temporary project needs.
- You have capital limitations or want to save money upfront.
- You want to try out different models and features without committing to a purchase right away.
In contrast, buying equipment is usually best when:
- You use the equipment more than 60%-70% of the time.
- You want total freedom to use and customize the equipment as you see fit.
- You're prepared to take on long-term ownership needs, such as maintenance and storage.
Get a Quote From BuildingPoint SouthEast Today
Besides buying or renting heavy equipment for the job, construction businesses have another essential consideration — whether to purchase or rent industry-leading technologies to enhance accuracy and efficiency on the job site.
Fortunately, BuildingPoint SouthEast offers various field solutions, like 3D laser scanning technology, robotics, mixed reality and drones. Whether you want to rent or buy, we supply multiple products and services from Trimble, a leader in productivity-enhancing technologies for construction sites.
As the exclusive Trimble dealer in our territory, we're ready to match you with high-tech solutions that meet your unique business needs and challenges. Explore our field solutions and rental options, then request a quote today!