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Long Term Cost of Ownership: The Rent vs Buy Decision
Keeping your industrial machines clean is a job that will never end as long as you own equipment. Pressure washing is an important activity for proper maintenance of your industrial machinery that helps reduce the long-term cost of ownership. Keeping equipment properly cleaned improves machine performance and helps mechanics more effectively perform repairs when necessary.
You commonly evaluate whether to rent or buy the machinery you use to do work for your customers… What about the equipment you use to clean your machinery?
The rent vs buy decision is commonly viewed as a simple financial question. Cost of capital, cash flow, depreciation and expected equipment life can help with making the rent vs buy decision. But there are many factors that don’t show up by only looking at dollars in an accounting evaluation.
What’s Your Situation?
Having the resources to keep your machinery clean on job sites can be a challenge, especially in more remote operating locations. Do you or can you install wash racks and water treatment systems on all of your job sites?
Permanent or Temporary Location?
If you benefit from conducting all of your work from a more permanent location, you may be more likely to have suitable wash facilities available to both clean and manage wash water. Some businesses move machinery from job to job which can make washing more difficult without necessary wash equipment available.
Regulatory and Environmental Situation?
Varying locations will often mean varying regulatory requirements. An area that is less strict about transporting dirty machinery or contaminated equipment might allow you to consider bringing dirty equipment back to a location where you have suitable wash and treatment facilities; though, I’m not aware of any area where that’s actually legal.
If remaining compliant across your entire operation is a priority, you may be challenged to find adequate wash facilities on all job sites that support compliance before transporting dirty or contaminated equipment.
Frequent or Seldom Equipment Washing?
Some businesses have high demand for equipment washing. These companies will have consistent use and associated experience with operating and maintaining their wash system which often means a company-owned wash system if the work is at a fixed location.
Other businesses don’t have a frequent or consistent need to wash equipment. It may be that the jobs are temporary or in temporary locations or both. Whatever the underlying cause, a permanent wash rack installation may not be the best solution.
Show Me the Money!
The situational questions mentioned above are not in conflict with the financial evaluation; they should complement it. You can’t make an informed financial decision without considering the overall operating environment.
Once you consider and fill in the picture of your unique business needs, the best solution regarding a rent vs buy decision should start to emerge. You should put some objective evaluation behind the costs and benefits associated with the situations outlined above.
There are costs associated with all of our decisions as business managers:
- Cost of maintenance
- Cost of non-compliance, DEQ, DOT, OSHA
- Cost of competing alternatives
It can become overwhelming to make the best decision if you let it.
The recommendation is to be objective in your evaluation and consider both business operation requirements and financial analysis.
- Answer the questions regarding how and where your business needs to clean your machinery.
- Apply the appropriate value to the real costs listed above.
- Evaluate the competing costs of purchasing a wash system versus renting a system that meet the needs of your application(s).
The purchase or “buy” solution of wash system equipment is often the best solution. Where you have a permanent location with sufficient and consistent demand for use, buy is likely where you will find the best return on investment.
That said, there are many business scenarios where the demand is changing or jobs are temporary, a rental system will be a much more beneficial as a short-term expense.
Renting equipment may not only save your company capital, but it can also save your company time and space. When you rent, you don’t have to worry about repairs, maintenance, or storage of the rental equipment when not in use. No depreciation or insurance is another benefit. Evans Equipment makes high-quality equipment that is both flexible and readily available when your business needs it.
If you have questions surrounding the best solution to the rent vs buy decision, we are more than willing and able to help you work through the process with experienced technical and support staff. Evans Equipment will provide all the information you need to make an informed decision and choose wisely between whether to rent or buy.