Rent Versus Buy Calculator

Inputs

This tool compares renting and buying using present value (PV).

Renting PV

PV_rent = Σ_y=1..H ( RentCost_y / (1 + d)^y )

Where each year's renting cost is:

RentCost_y = U · R · (1 + e)^y−1 + Delivery

Buying PV

PV_buy = Down + PV(LoanPayments) + Σ( Opex_y /(1 + d)^y ) − Resale/(1 + d)^H

Loan payments use standard amortization. Operating expenses include maintenance, insurance, storage, and taxes.

1. Set the analysis horizon to match expected project needs.
2. Enter typical billed usage days per year for the equipment.
3. Add the current rental rate and expected yearly escalation.
4. Provide purchase price, down payment, loan rate, and term.
5. Estimate annual ownership costs and end-of-horizon resale value.
6. Click Calculate to view totals and break-even usage.
7. Use the download buttons to export CSV or PDF results.

1) Why this decision impacts project profitability

Equipment strategy affects bid accuracy, schedule risk, and cash availability. Renting usually converts fixed costs into job-based variable costs, while buying can reduce long-run unit cost when utilization is high. This calculator quantifies both paths so you can justify decisions with comparable totals.

2) Estimate realistic utilization, not optimistic guesses

“Days used per year” is the strongest driver of break-even. Track time sheets, dispatch logs, or rental invoices. If a skid steer runs 120 days/year on average, compare that to seasonal swings and downtime. Using conservative utilization reduces the risk of overbuying.

3) Understand the full rental cost picture

Rental cost is more than the advertised daily rate. Delivery, pickup, damage waivers, and late fees can shift the outcome. The escalation input models annual rate increases, which often occur during busy construction cycles or when supply tightens. Capturing these factors improves planning accuracy.

4) Ownership costs include operating and holding expenses

Buying introduces maintenance, storage, insurance, and local fees. Some costs scale with usage (wear parts), while others are fixed (yard space, annual inspections). Separating “fixed per year” and “per usage day” maintenance helps match the cost model to how equipment actually ages on your sites.

5) Financing changes timing, not the need for discipline

A loan can protect cash flow but increases total paid through interest. The calculator uses a standard amortized payment schedule; for example, financing a portion of an 18,000 purchase over three years creates predictable monthly payments that you can allocate across projects using internal charge-out rates.

6) Present value keeps comparisons fair

Costs occur at different times: rent hits as you work, while buying concentrates cash early and recovers value later through resale. Discounting converts future cashflows into today’s money using your discount rate. If your capital is constrained, a higher discount rate will typically favor renting.

7) Read break-even usage as a decision threshold

Break-even days/year indicates the utilization level where buying and renting have similar present-value cost. If your expected usage is above break-even, owning tends to win economically. If usage is below, renting often reduces idle cost exposure and keeps your fleet flexible.

8) Turn results into an actionable equipment policy

Use the yearly cashflow table to match payments to project schedules, then set a target utilization for owned equipment (for example, 65–75% of workable days). Revisit inputs quarterly, especially rental rates, resale estimates, and maintenance history. Export CSV/PDF for estimating files and stakeholder reviews.

1) What discount rate should I use?

Use your company’s required return or weighted cost of capital. If unsure, start with 6–12% and run sensitivity checks to see how the recommendation changes.

2) Does this include taxes and depreciation benefits?

This version focuses on cash costs and resale value. If you need tax impacts, adjust ownership costs or resale to reflect net effects and compare scenarios consistently.

3) How do I estimate resale value reliably?

Use recent auction results, dealer trade-in quotes, and condition-based assumptions. Be conservative if utilization is heavy, because higher hours and wear reduce resale value faster.

4) What if I rent only during peak season?

Lower the usage days per year to match peak-only needs and consider higher escalation or delivery costs. Seasonal renting often improves flexibility and avoids off-season storage and idle capital.

5) How should I model maintenance for harsh sites?

Increase per-day maintenance for abrasive materials, long travel distances, or extreme temperatures. Keep fixed maintenance for scheduled service, and move wear-related items into the per-day field.

6) Why can buying look cheaper but still feel risky?

Buying can reduce long-run cost yet increases commitment. If projects pause, utilization drops and the economics worsen. Compare the break-even days/year to your worst-case workload, not just the average.

7) Can I use this for tools other than heavy equipment?

Yes. Replace the inputs with your item’s rates, purchase cost, financing, upkeep, and resale assumptions. The same present-value approach applies to generators, scaffolding, and specialized tools.