Why Businesses May Want to Rent Hardware Instead of Buying It
The option of renting business equipment instead of buying it is being presented in more and more business sectors and with a good reason. Borrowing a piece of hardware that is rarely used only for the time it’s needed sounds logical.
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Large retailers and start-ups specializing in rentals now want to change this and allow private customers to use smartphones, PCs, laptops, or televisions on the basis of a monthly rental fee. It’s clear that the ability to rent all sorts of tech equipment is a logical step in the evolution of a subscription economy. However, renting hardware wasn’t necessarily a top-of-mind priority for businesses until the pandemic hit.
Everything changed when offices closed, and as buildings sat empty, all those unused desktops, laptops, and widescreen monitors began to look like a total waste of precious cash. That and the millions of remote workers made a perfect case for renting not just software but also phones, laptops, and even furniture.
IT renting advantages
This is the first consideration that first comes to mind for financial and IT managers. In the short term, renting hardware is less expensive. There’s no depreciation, which makes it possible to generate cash for other investments, not to mention the rental can be tax-deductible. We’re talking here:
- Less initial expenses – a key advantage of leasing IT equipment is that it allows you to acquire essential assets with minimal initial costs. Because equipment renting rarely necessitates a down payment, you can acquire the equipment you need without considerably impacting your cash flow.
- Tax-deductible – you can reduce the net cost of your lease by deducting the lease payments as business expenses.
- Flexible terms – unlike loans for buying equipment, leases are easier to obtain and have more flexible terms.
- Easier to upgrade equipment – renting your hardware lets you address the problem of obsolescence. If you use your lease to acquire equipment that may be outdated in a short period of time, a lease passes the liability of obsolescence onto the legal owner of the equipment.
IT renting disadvantages
- You’ll pay more in the long run – depending on how you look at it (or your financial means), leasing can be more expensive than purchasing. For instance, a $4,000 PC would cost a total of $5,760 if rented for three years at $160 per month, only $4,000(plus fees) if purchased entirely.
- You keep paying the equipment even if you stop using it – depending on the terms you’ve agreed upon, you may have to make payments for the complete lease period, even if you don’t use the equipment.
- You don’t own the equipment – there’s also the fact renting won’t allow you to build equity in the equipment. This lack of ownership poses a significant disadvantage for business owners.
IT buying advantages
- Complete ownership – the most obvious IT managers and executives choose to purchase tech equipment is that they get complete ownership of it. That’s especially relevant for establishments that have a long useful life and are less likely to become technically outdated.
- Buying is easier – buying equipment is easier than leasing – you only decide what you need and swipe the card. Renting, on the other hand, involves at least some paperwork, as renting companies often ask for detailed financial paperwork.
- You’re responsible for maintenance – when renting equipment, you’re often required to maintain it according to the leasing company’s specifications – which can be expensive. Having complete ownership, on the other hand, lets you determine the maintenance of the schedule yourself.
IT buying disadvantages
- The initial price for needed equipment may be too high – you may need to tie up lines of credit or have at disposal a hefty amount to acquire the hardware you need. Lenders, on the other hand, may place restrictions on your future financial operations. Those funds could be better used elsewhere for marketing, advertising, and other operations that can help scale your business.
- Getting stuck with outdated equipment – although complete ownership is the biggest advantage of buying business hardware, it can also be a great impediment. If you’re a tech-savvy business relying heavily on the latest IT infrastructure, you run the risk that the equipment may become outdated, and you may be forced to reinvest in new equipment.
Why You Should Lease
Given the latest global events, increasingly more businesses were forced to readjust their practices and, in many cases, allow their employees to work from home. It makes sense that in order to create a high-quality remote working environment, workers are going to need access to modern equipment, and this may mean investing in a large amount of equipment at once. For this reason, businesses are increasingly turning to equipment renting services like My Exchange Store.
There’s also the case that when you’re scaling up your business, rental equipment is a much more affordable way to grow your operation. Unlike buying new IT equipment, which can take longer to fulfill depending on the complexity of the order, renting lets you install your units with the urgency needed to meet the scaling demands of the market.
Renting also gives you the flexibility necessary for short-term projects that don’t provide the justification for permanent purchase. This temporary solution does not impose the same kind of responsibility that complete ownership brings. More often than not, rental equipment provides business owners the warranty and technical as purchased equipment which means you can get all the pros of the ownerships without the disadvantages of the long-term maintenance. Ultimately, if your equipment requirements are significantly high, such as computers for your entire marketing team, leasing may be a better option.
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