Tech equipment can be a crucial part of creating an efficient, cost-effective business, no matter what industry you’re in. But, with constant changes and updates to common technologies emerging every day, it can be difficult to decide the best way to finance your IT purchases. There are pros and cons to both leasing and purchasing your equipment and software. Take a look at both scenarios to determine which is the best decision for your business.
Leasing IT Equipment: Pros and Cons
One of the biggest benefits of leasing your IT equipment is that you get better access to the latest technology. Rather than using a piece of equipment for its total lifespan, you can return it at the end of the term. Additionally, with a lease you have the option of upgrading or selecting a different model entirely at the end of your term, rather than being stuck with outdated equipment.
Financially, the benefits of IT equipment leasing are a bit of a mixed bag. You typically don’t need any cash up front, so you don’t have to worry about strained liquidity in your business. You can also budget more effectively because you know exactly what you owe each month.
On the downside, equipment leasing is usually more expensive over time compared to purchasing the same product outright. Plus, you’re stuck with your payments regardless of whether or not you continue to use the equipment throughout the lease term.
Purchasing IT Equipment: Pros and Cons
Buying your IT equipment can give you more control and flexibility in the process. First of all, it can be easier than leasing because you don’t have to submit an application or negotiate rates. You can also perform maintenance on the equipment however you see fit, rather than adhering to whatever is in your equipment leasing contract. Finally, you can use your purchase as a tax deduction at the end of the year.
What’s the downside to purchasing IT equipment? Perhaps the biggest detractor is that you’ll be stuck with it whether a new model has been released or not. If your staff’s laptops become slow and outdated after a couple of years, you may end up having to buy entirely new ones. Plus, you need the cash in your operating budget to make the purchase in the first place.
Take a look at your company’s budget and IT needs both in the long-term and short-term. Just a short planning exercise can help you determine your priorities both financially and logistically to choose between equipment leasing and purchasing.