Buying vs Renting Office Equipment: What is the More Cost-Effective Option?
Office equipment is one of the biggest and most important investments you'll make when starting or expanding a business. It helps keep your operations running both efficiently and effectively.
So when it comes to acquiring equipment for your business, you have to consider everything carefully. A critical decision to make is how you'll pay for office hardware like business laptops, desktop computers, and printers.
Buying and renting are two financing options for your IT equipment needs. Although making a purchase is the common route among most businesses, renting has become an increasingly popular option for startups and small businesses.
Should you buy or lease office equipment? Each option has its pros and cons that you have to understand before you start looking for a supplier.
Benefits of Buying Equipment for Your Business
1. Easier Way to Procure Office Equipment
Buying office equipment is a simpler and more straightforward process than renting. You simply place an order, pay for it, and wait for delivery. No paperwork and contracts are involved. Your business is also not bound by any terms and conditions laid out in lease agreements.
2. Using Brand-New Products
A newly purchased, brand-new business equipment is more likely to run faster and be energy-efficient. This advantage translates to increased productivity and power savings.
3. Getting Exactly What Your Business Needs
Buying office equipment gives you total control over what you get. For instance, you can select a brand and model—even the exact specs—for work laptops based on what your business or specific job requires. Your choices are not as limited as the available stocks of equipment for lease.
4. Equipment Ownership
Once you purchase office equipment, it becomes your company's property. When you're no longer using the equipment, you have the freedom to lease or sell it to another business or individual to make some money back.
Downsides of Buying Equipment for Your Business
1. Higher Initial Expense
An equipment purchase for a business involves high initial costs—it requires paying the full cost upfront. This can be a problem for small businesses with a tight budget. They end up settling for cheaper equipment that may not be exactly what they need.
2. Costly Maintenance
Ownership is one of the greatest advantages of buying office equipment. However, it comes with one drawback: the equipment can fail and give in to normal wear and tear over time. That means your business has to shell out funds for maintenance work and occasional repairs.
3. Getting Stuck with Old, Outdated Equipment
Especially for tech-based companies and startups, having up-to-date technology is a must. However, the latest technologies get obsolete quickly, being replaced by newer ones. Since you own the equipment you purchased, you're forced to continue using it—even if it's already outdated—until you can afford to buy a new batch.
Benefits of Renting Equipment for Your Business
1. Lower Upfront Cost
Limited resources should not deter small and medium businesses from obtaining state-of-the-art office equipment. This is where renting makes a better choice than buying.
Companies with small budgets can get more expensive equipment than what they could otherwise afford. Renting makes it possible by allowing you to make lower monthly payments over a fixed period (rather than paying the full cost upfront).
For example, the cost of one business laptop purchase is equivalent to the cost of renting 10 laptops of the same brand and model. So if you're procuring laptops for a small team, renting will initially save you 10 times the cost of buying brand-new units.
Renting helps free up your working capital, so you can allocate your extra funds to expenses like marketing for maximizing your ROI and growing your business.
2. Easier Way to Finance Office Equipment
Some businesses that don't have enough cash at hand to buy office equipment turn to banks to get the funding they need.
Planning to apply for a business loan from the bank for financing your office hardware purchase? It's never an easy process. Aside from the long list of document requirements, banks grant a loan only to businesses with at least two to three years of profitable operations—something that many startups don't have.
Unlike banks, renting companies require clients to have only good credit standing. Thus, it's easier to get laptops for lease than getting a bank loan to purchase them.
3. Flexible Terms
Renting office equipment is good for your cash flow. You can choose the lease term whose monthly payments fit your budget. By spreading out your payments, you don't have to worry about quickly depleting your funds.
This equipment financing option is also ideal for short-term business needs, like a special or urgent project that needs to be launched in a few months. Lease terms are typically short, with one month as the minimum.
4. Faster to Upgrade to the Latest Technology
Any piece of technology never lasts—that's a fact. Laptops, for instance, have a lifespan ranging only from three to five years. You can't expect them to outlast your company's lifetime.
This is why renting office equipment for a fixed period makes sense. You don't have to be stuck with something that becomes obsolete or conks out after a few years of use.
Once your contract expires, you may either continue the lease or opt to upgrade to more technologically advanced units, if the existing leased units are outdated.
Downsides of Renting Equipment for Your Business
1. Limited Product Options
The range of choices is wider for office hardware that are up for sale compared to those up for lease. When you lease office equipment, your options are limited to the products available for renting.
It's likely that the particular brand and model you're looking in a laptop for lease, for example, is either out of stock or not available at all. You might have to settle for what's in stock if you really prefer a laptop for rent.
2. No Ownership
Because the leased units are the property of the renting company—not yours—you cannot sell or sub-lease them even if you're no longer using the equipment. You're bound by the contract to pay for the whole lease term. If you wish to pre-terminate the contract, you'll be charged with a penalty fee.
3. More Expensive in the Long Term
Office equipment renting saves you money upfront by avoiding a lump-sum payment. However, you'll end up paying more over time.
When you lease, you keep paying a certain amount monthly to continue using the equipment, even if it's already outdated or you're no longer using it.
Let's say you take a three-year lease contract on 10 business laptops (worth ₱499,900) at a monthly lease rate of ₱49,990. Initially, you save ₱450,000 by renting instead of buying the equipment.
But renting will cost you a total of ₱1,799,640 over the three-year period. Had you purchased the 10 laptops outright, you would have spent only ₱499,900.
Which is the Better Office Equipment Financing Option for Your Business?
The right choice depends on your budget, business needs, and how long the equipment will be used. These are the most important considerations when choosing between buying vs renting office hardware.
Reasons to Buy Office Equipment
- You have the budget for it.
- There's a specific brand and model you prefer that's not available for lease.
- You want to get the equipment ASAP without going through the paperwork of renting.
- You want to save more in the long run.
Reasons to Lease Office Equipment
- Your business has limited capital.
- You have to manage business costs and maintain a good cash flow.
- You need office equipment that has to be upgraded every few years.
- You need equipment only for a short-term business need.
Considering the pros and cons of buying vs renting office equipment, making a purchase is the better choice for larger and more established companies, while renting is perfect for freelancers, startups, and SMEs.
Whether you need to buy or lease equipment, you can count on PoundIT Business to provide for your specific business needs at reasonable prices.
You can buy office equipment from us, including laptops, desktops, printers, projectors, and more. If you'd rather lease, you can also rent laptops from PoundIT Business. We offer a renting option for small businesses and startups in the Philippines.
Talk to us and let's work together to meet your office equipment needs based on your specific requirements and budget.