AssetCenter
Rent vs buy equipment calculator
Find out whether buying a machine or renting it when you need it costs less. Enter the price, what it would sell for later and what it costs to keep, then the rental rate and how many days a year you use it. The calculator shows the yearly cost of each and the number of days a year where owning starts to pay.
Yearly cost by days used
Where the money goes, per year
How the comparison works
Owning a machine costs money every year whether it works or sits in the yard. Renting costs nothing until you need it, then costs more for each day. The calculator puts both on a yearly footing.
Owning a year = (price − resale) ÷ years + (price + resale) ÷ 2 × cost of money + maintenance + insurance
Renting a year = (day rate + delivery ÷ rental length) × days used
With the example figures, a $60,000 machine sold for $30,000 after five years loses $6,000 a year. On average $45,000 is tied up in it, which at 8% is $3,600 a year, and upkeep adds $3,700: $13,300 a year to own. Renting at $450 a day with a $300 delivery every five days costs $510 a day, so owning pays once the machine is needed for more than 26 days a year.
What the numbers leave out
- Availability. An owned machine is there the morning you need it. In busy seasons a rental may not be, and a job waiting a day for a machine has its own cost.
- Utilization you can’t count on. If the days-used figure depends on work you haven’t won yet, try a lower number and see whether the answer changes.
- Tax. Depreciation deductions can make owning cheaper after tax, and rental payments are usually deductible as they are paid. The depreciation calculator and MACRS asset class lookup show what a purchase would deduct each year.
- Operators and fuel. They cost the same whichever way you go, unless the rental includes an operator.
Once you own a fleet, the same sums come down to knowing how much each machine is really used. See how contractors track that in construction equipment management, and how GPS tracking for heavy equipment records engine hours.
Rent vs buy FAQ
The yearly cost of owning (the drop in value spread over the years you keep the machine, the cost of the money tied up in it, maintenance, insurance and storage) is divided by the cost of renting for a day, including a share of each delivery. Use it for more days a year than that and owning is cheaper; fewer, and renting is.
Money spent on a machine can’t be used elsewhere, so it has a cost even without a loan: the interest you would have earned, or the return the business expects on its capital. Enter your loan rate if you finance the purchase, or the return you would otherwise expect if you don’t.
Tax effects such as depreciation deductions, fuel and operators (which cost the same either way), and the value of having a machine on hand the moment you need it. It also assumes rental rates and costs stay level over the years you own the machine.
Only as accurate as your estimate. Look up recent auction or dealer prices for the same machine at the age you would sell it, and try a lower figure to see how sensitive the answer is.
Know how much each machine is really used
AssetCenter records every checkout, job and repair against each piece of equipment, so the days-used figure comes from your own records instead of a guess, and shows what each machine has cost to keep. Free for up to 25 assets.