When you need equipment on your jobsite, there are two options: buy or rent. Advantages and disadvantages come with both, so assessing your unique situation is essential to making the right decision. Choosing to rent or buy may be based on a cost-benefit analysis, availability, storage options, or a number of other factors.
Reasons to rent It saves money
This is not the case in every circumstance, but oftentimes, renting heavy equipment instead of buying it will save you money. In the planning stages of a project, you should perform a cost-benefit analysis for all pieces of equipment you’ll need, but don’t currently own. This will help determine whether renting or buying makes the most sense. One rule of thumb is to rent a piece of machinery if you need it for less than 60% of the project duration.
A cost-benefit analysis is a type of data-driven decision-making. Simply put, it’s a way to determine what makes the most sense from a business perspective. Gather the estimated costs, benefits, and opportunities associated with a project. Then, add up the costs and subtract that amount from the total projected profit or benefits of the project. From there, you’ll be able to see if the benefits outweigh the costs, or vice versa.
It eliminates associated costs
Buying a piece of equipment costs more than the initial number on the price tag. Not only do you have to make payments on the machine, you’ll have to think about operational, maintenance, storage, and transportation costs, as well. You also have to think about depreciation. The second a new piece of equipment arrives on the job site, it starts to depreciate. With rental equipment, though, you won’t have to worry about any of those costs.
You get the newest equipment
Rental companies keep their equipment up-to-date with the latest technology and efficiency and safety features. That means when you rent, you’ll receive the bells and whistles of newer equipment — without the steep price tag.
When to consider buying
While renting has many benefits, it won’t always be the best option. If renting over buying is not going to save you money, for example, buying a new piece of equipment makes sense. It’s especially beneficial when the piece of equipment will be used often, and for years to come.
Purchasing equipment may qualify for tax advantages. For instance, Section 179 is a tax deduction that allows companies to write off the full purchase price of all qualifying new and used equipment purchased during a calendar year up to $1,050,000 in 2021. This makes purchasing equipment attractive – you get the equipment needed and a tax deduction for the year.
Another reason to buy is when the equipment you need is not available to rent. Whether your local rental stores don’t carry the specific piece of equipment, or it’s being rented by someone else, renting heavy equipment is not always possible — you may have no choice but to purchase new equipment.
Before starting a new project, take inventory of the items you might rent, then contact your local, ARA-affiliated, rental store for information on available heavy equipment rental products. You may be surprised by the variety of items available. To locate the rental store nearest you, use the Rental Store Quick Locator above.
Frequently Asked Questions
What are the advantages to a small contractor of renting construction equipment instead of owning?
The biggest benefit is being able to avoid the upfront costs of purchasing equipment, along with maintenance and repair costs. This is especially applicable if you only plan to use the machine for a short period of time.
Is renting heavy equipment worth it?
Heavy equipment rental oftentimes allows you to save a significant amount of money over buying. There are always exceptions, though, so make sure to carefully assess your specific project or situation before making a decision.
How much does it cost to rent a full size excavator?
The cost of heavy equipment rental is dependent on your location and the amount of time you plan to rent the machine. On average, renting a full size excavator costs about $1,300 per day or $3,500 per week. For reference, buying a full-size excavator new costs between $200,000 and $500,000. Plus, the additional cost of maintenance, insurance, storage and transportation for owned equipment.