BUY, RENT, OR LEASE. HERE'S THE ANALYSIS MOST CONTRACTORS SKIP.
The equipment buy versus rent decision hinges on utilization rate. Above 60% billable utilization, buying typically wins over 5 years. Below 40%, renting is almost always cheaper once you count depreciation, insurance, maintenance, financing, and idle time.
Utilization is the whole test, and it's the one figure the decision usually skips. A machine that works 150 days a year carries its own ownership cost without much help. The same machine at 60 days a year is a payment you make whether it turns a bucket or not, and the payment doesn't stop when the schedule goes quiet. Count the billable days first, then price all three options against that day count. Buying a machine you use half as often as you assumed is how a good year turns into a fleet you can't feed.
WHAT IT MEANS.
An internal equipment rate is the cost per hour or day assigned to owned equipment when it works a job.
The three options aren't three prices for the same thing. Renting costs the most per day and commits you to nothing. Buying costs the least per day at high utilization and commits you to the payment either way. Leasing sits between them and trades some of the ownership upside for a smaller commitment. Which one wins is settled by how many billable days the machine will work, so that's the figure to build first.
WHY THE EQUIPMENT CALL GOES WRONG.
They buy without modeling utilization
The decision is usually emotional. Somebody says we're always renting this machine, might as well own it, and the purchase order follows that same week. The math only works if the machine sits on billable jobs often enough to offset ownership cost, and in most cases nobody counted the days it would work before the money went out the door.
Equipment costs go to overhead, not to jobs
Without an internal equipment rate, depreciation, loan payments, and maintenance costs all sit in overhead. Jobs look more profitable than they're because the equipment they used isn't charged to them. Every job that ran the machine reads better than it performed, and the cost turns up as overhead nobody can trace back to a single job.
The down payment hits cash at the worst time
Equipment purchases are often triggered by a large new contract, which is the same moment mobilization is about to drain cash. A $60K to $100K down payment on a new machine, stacked on top of mobilization costs for the new job, can create a cash crisis. The contract that justified the machine is the same reason you can't afford it that month.
WHAT IT LOOKS LIKE IN DOLLARS.
Year one on the buy is $40K down plus $36K in payments, so $76K goes out. Over 5 years the buy totals roughly $268K, with a residual of about $80K still sitting in the machine. Renting the same excavator at 150 days a year totals roughly $675K over those same 5 years. The buy wins by about $327K, and that whole spread is a function of the 150 days.
Above 60 percent billable utilization, buying typically wins over 3 to 5 years. Below 40 percent, renting is almost always cheaper once you count depreciation, insurance, maintenance, financing, and idle time. Between those two numbers is where the internal equipment rate settles it, because that's the zone where a few days a year moves the answer either way.
HOW TO RUN THE NUMBERS.
The first step is counting the billable days the machine will work in a year, taken off your own schedule and backlog rather than off a feeling. That day count drives everything after it, because ownership cost per day is total cost divided by days worked. Once the days are on the table, buying, renting, and leasing can all be priced against the same denominator.
Set a daily or hourly charge per machine that covers depreciation, a maintenance reserve, insurance, and financing. When the machine works a job, that job gets charged at the rate. SPM builds this into ControlQore so equipment costs flow to jobs automatically and the overhead allocation stays accurate.
A financed purchase takes 10 to 20 percent down plus monthly payments, and the down payment is an immediate cash event of $50K to $150K for most commercial equipment. That figure goes into the cash forecast next to the mobilization on the job that triggered the purchase, so you see both in the same week rather than one at a time. If the two together break the week, the answer on this machine is to rent it.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
Pricing
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
FREQUENTLY ASKED.
