Lease Or Buy? How To Purchase Print Finish Equipment
Running any business involves a wide range of expenses, but for a small print finish shop equipment may be the most important, and biggest, expense. The question then becomes whether to buy or lease that equipment?
Business owners can be faced with many factors in the decision including the upfront costs, variable costs, business growth and taxes.
Upfront Costs
Leasing equipment requires less upfront capital than buying it outright. It can also offer you a choice of equipment and trial periods to determine which is best for you. What if you're leasing binding machines and a UV coating machine, but find you need binding and laminating? You can easily change from leasing a UV coating machine to leasing a laminator instead.
Maintenance costs may also be included in your leasing agreement, saving you a lot of time and money. Say you're leasing binding machines and one breaks in the middle of a job. You can just have the leasing company bring you a new one.
Fixed versus Variable Costs
It is important to remember that leasing adds to your monthly overhead. Also, when you buy equipment outright the price is set. Leases can be subject to price increases. However, any extra costs associated with leasing may be made up for by the benefits of being able to update your equipment to keep up with competition, as well as having your maintenance covered. Just be sure to do the math and make sure that you're not paying more in the long run.
Growth Factors
If you have an opportunity to get a big job from a large company. The current equipment you have will limit your ability to deliver. So, leasing gives you the flexibility to upgrade to accommodate the demand. So, let's say you are asked to produce post card mailers. You will need a uv coating machine and a cutter. But, your current set up has neither. Leasing gives you the flexibility to upgrade to what you need.
You may want to buy core equipment and lease nonessentials, or may need to lease equipment until you can afford to buy it. Many leasing places also offer rent-to-own type programs or discounts on buying equipment that you've rented for a certain length of time.
Taxes
Leasing and rental costs for equipment can usually be counted as business expenses, which are tax deductible. If you buy equipment you can count it on your taxes that year, but it counts on your taxes every year that you lease it. Depending on circumstances, this could come in handy.
So, should a company buy or lease their equipment? For a small print finishing shop the answer is to lease.
About the Author
Garry Jones is President of LLoyds of Indiana in Indianapolis, IN. Gary is local leader in printing, binding, signs and banners. He helps companies use visual media to further their marketing. He is also a national distributor of print finish equipment. You can read his blog at http://printfinishblog.com
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