To Rent or Buy?
August 3, 2009
Imagine this situation: You are standing in the power tools section of your local hardware store gazing longingly at the dazzling array of equipment with which you could transform your home into something worthy of a Bob Vila masterpiece.
Your attention is caught by a particularly attractive offer: 12-inch dual bevel compound miter saw (with laser tracking!) for $449. This seems like a really good deal.
A little devil on one shoulder says, “Go on! No more messy edges. Wouldn’t that be great?” But the angel on the other shoulder says, “Hang on, haven’t you heard of the credit crunch? How often are you actually going to use that saw? Can you really afford to spend the cash? And where will you keep it? If you really need a miter saw, why not rent one?”
Luckily, your partner arrives and you don’t have to make a decision, but the dilemma is one that many of us have to deal with in our everyday working lives. For the miter saw, substitute a portable XRF metals analyzer or an ultrasonic scanner; for the angel, substitute your boss; for the devil, yourself; and for your partner, substitute the CFO.
Most of us buy equipment when we need it; however, how many of us stop to consider renting as an alternative?
AdvantagesSuppose that you need to carry out tests for high-alloy metals and stainless steel with a portable XRF analyzer. Such analyzers can be used within industry to analyze a wide range of alloys, ferrous and non-ferrous metal across a range of applications. But, perhaps since this is not a frequent requirement for your company, it seems logical to rent one. On the other hand, if your colleagues can find use for this equipment every week, it might make more sense to buy the instrument. The decision to rent vs. buy often is dictated by the frequency of intended use. There are a number of other advantages to renting as well.
Suppose the analyzer breaks down. You end up spending a couple of hours trying to fix it, give up and then try and convince the manufacturer that it should be replaced under warranty. Manufacturers usually don’t have 24-hour support lines and are typically 9 to 5, Monday through Friday. Rental companies, on the other hand, do have on-call engineers and can assist in troubleshooting equipment at any time or can arrange for a replacement unit to be dispatched immediately.
If a rented instrument malfunctions, it is replaced quickly. A rental company is anxious that the instrument performs to specification, so that you might rent again.
XRF analyzers are usually kept in pretty good condition, but if you did not clean it adequately at the end of the last day’s work, you might find that time is wasted preparing the instrument the next time you need to use it. Rented equipment is always delivered ready for use, to the site on the prescribed day, and at the right time.
Now let us also suppose that a colleague in a different department heard that you had your own equipment, and asked if he could borrow it for use on a site in the next county. Will he look after it properly and return it in its original condition? Will he return it when he said he would?
In the following year, your colleague calls again, and asks if you can bring the XRF analyzer to an important site where they have a corrosion problem and need to check the composition of the affected equipment. However, when you arrive on the scene, you discover that the job requires an analyzer with a different library of metals. So, your colleague rents the latest analyzer and you discover that XRF analysis technology has moved on since you made your purchase and the rented model is much easier to use.
You would love to have the new model, but having purchased the now older model, you are stuck with it, unless you can find a way to dispose of it. However, it did cost a large amount of money and might be of use one day. Therefore, you keep it and lock it up in a storage area, even though your company is still paying monthly depreciation on it.
Choosing the Right InstrumentEach time you rent an XRF analyzer, or indeed any other equipment, you have the opportunity to choose the model that suits a particular application.
With rentals, you are able to rent the latest, highest quality model and, at the end of each renting period, you simply return the instrument, eliminating storage or disposal problems.
XRF analyzers might be very different to other instruments, but the same principles apply. For example, within a fleet of rental instruments there are many that are employed for inspection and maintenance purposes. These include high-speed cameras, flaw detectors, thickness gages, moisture meters, fiberscopes, pipe and cable trackers, pipeline inspection crawlers and thermal imagers.
The strongest case for renting is, of course, financial. Credit is in short supply and pressure has mounted on capital expenditure budgets, which has heightened the need for rental equipment.
A further financial reason for renting is the cost of depreciation. Equipment is often written down over three years, sometimes less, which can have a significant effect on the bottom line.
Calibration and Maintenance SkillsThe case for renting technical instruments is even stronger than it is for other equipment, because these instruments often require external calibration or, at the very least, skillful maintenance with specialist equipment. It makes sense for this work to be performed by fully equipped and trained technicians, and for this reason, the technicians at rental companies are trained by instrument manufacturers.
The expertise of the company’s engineers also is important in helping customers to select the right equipment, and secondly, to use it to its highest capabilities. The case for renting is stronger if the equipment is expensive to buy or not destined for frequent use. Financial considerations should also be taken into consideration. Some equipment may require skilled calibration and maintenance, coupled with specialist equipment, and the cost for this could be prohibitive. Renting also makes sense for customers that need access to the latest technology or if they do not wish to bear the cost and inconvenience of storage.
So, the next time you find yourself thinking illogically at a hardware store or considering purchasing a piece of equipment for use on the job, remember to listen to the angel on your shoulder.
Andy Holroyd is senior vice president of Ashtead Technology’s North American operations. For more information, call (281) 398-9533 or visit www.ashtead-technology.com.