Leasing vs. Buying technology
One question that comes up frequently with our clients is whether buying or leasing computer inventory is the best strategy for businesses in today’s market. It’s a good question, and one with a straightforward answer.
Here at Advisory, we almost always recommend a leasing model. (We’ll still happily support businesses that choose to buy, of course — but if you ask us which method is the better choice, we’ll usually tell you that leasing makes sense.
Check out these six quick reasons why leasing your computer inventory makes the most sense — whether you’re using Macs, PCs, or a combination of the two.
Buying Your Computer Inventory Carries Spikier Costs
First, computers are relatively expensive. Buying a new device for every single employee every few years tends to create spiky costs, where your IT spend is ultra-low for 71 months and then through the roof in month 72.
Can you plan and account for this kind of spikiness? Sure. But this can be hard to do if you’re just starting out or dealing with cashflow issues. Leasing is a quick and easy way to “un-spike” those equipment costs.
Buying Creates End-of-Life Complications
When you own the devices, you still own them when they start to slow down or stop working entirely. And that can get … complicated. Yes, those old machines still have some value, and you can (in theory) resell them to recoup some cost.
But it’s extremely tricky to do this safely and efficiently. You have to nuke all your company and personal data, first of all, and then you’ll need to devote time and resources to finding a buyer, negotiating the sale, and transporting the old equipment. It’s time better spent doing something else if you ask us.
Leasing Levels Out Costs Over Time
When you lease your computer inventory, you’ll instantly level out your equipment IT spend over time. Again, larger organizations should have no real trouble budgeting for spiky, once every few years kinds of expenses. But it’s still easier if you don’t have to worry about doing so.
Leasing turns spiky costs into predictable monthly costs, increasing convenience for you and your team.
Leasing Can Lower Your Overall Cost
Not only does leasing spread your costs out over time it can also lower your overall cost. This isn’t like the consumer auto market, where leasing almost always loses you money. That’s because there’s still value in those devices when your lease is up, and the leasing company can extract that value at scale in a way that your organization likely can’t.
In most leasing arrangements, companies pay only 80% of the overall retail cost of the equipment over the course of the lease.
Leasing Can Be Categorized As an Operating Expense
Additionally, leasing can be categorized as an operating expense rather than a capital expense. We’ll leave this one to the accountants to explain, but there can be beneficial implications at tax time.
Leasing Is Easier for Lifecycle Management
Leasing makes it much easier to implement lifecycle management programs, where your employees can get refreshed tech every two or three years without significant expense, planning, or hassle. Companies that buy their devices always seem to want to stretch those devices to last as long as possible, losing real efficiency in the process.
Advisory Is Here to Help
Whether you’re leaning toward leasing or purchasing your next round of computers, you need a quality IT partner to help you navigate the conversation. Advisory Solutions is here to serve you. Reach out today with any questions you may have!