The Pros and Cons of Buying and Leasing Your IT
The pros and cons of buying and leasing your IT
If your business needs new IT equipment, should you lease it or buy it? It’s a tough question to answer, and there are pros and cons to each procurement strategy.
In this article, we’ll breakdown the advantages and drawbacks of both buying and leasing, so you can make an informed decision that delivers the best bang for your buck. Let’s get started.
The pros of leasing IT equipment
First, let’s take a look at the benefits of leasing your computers, network equipment, and other technologies.
Leasing ensures your business has access to the latest tech
IT equipment becomes obsolete pretty quickly. If you decide to lease, you can cost-effectively update your tech when this happens. For example, say you’ve taken a 12-month lease out on a printing and copy machine. After the 12 months, you are free to swap it out for the new and improved model.
You will enjoy predictable monthly expenses
Each month, you’ll know exactly how much your IT expenses will be. This makes budgeting much easier, allowing you to strategically allocate funds to areas of your business that matter most.
You won’t owe anything upfront
Leases rarely demand down payments. Many small- and medium-sized businesses struggle with cash flow, and you might not have the funds you need upfront to make a significant tech purchase.
You can keep up with your competition
Leasing enables small businesses to keep on their competitors’ toes by acquiring the latest in tech innovations, such as cloud computing solutions.
“Today, businesses across industries all over the world are realizing that the new next-generation technologies, which have fueled dramatic changes in customer expectations, must now be harnessed by them.” – Forbes
The cons of leasing IT equipment
There are a couple of cons to consider before you sign a lease.
Leasing will cost you more in the long run
The cold, hard truth is, leasing will cost your business more in the long term.
Think about it this way: even buying high-end tech solutions is relatively cheap compared to your business’s other expenses. On average, your office space costs $2 per hour. Your talent sets you back $60 per hour. Your IT? Just $0.20 per hour over its lifespan.
You have to pay even if you don’t use the technology
If you sign a two-year lease, you have to pay the monthly amount for two full years – even if you stop using the equipment after nine months. Change is inevitable, so be cautious when leasing tech that you may only need in the short-term.
The pros of buying IT equipment
Now, let’s take a look at the advantages of buying your IT equipment.
Buying technology is usually easier than leasing
Buying IT equipment is simple – after consulting with your trusted IT support team, you decide what your business needs and you go out and purchase it. No paperwork, no divulging financial information to a third-party, and no risk of unfavorable lease terms.
You have full control over IT maintenance
Leasing companies usually set out maintenance specifications that you are required to follow as per your contract – this can become expensive. If you buy the equipment outright, you have full control over your maintenance procedures and protocols.
Your tech may be deductible
Newly purchased assets – including things like computer and network equipment – are sometimes deductible.
The cons of buying IT equipment
Finally, let’s walk through a couple of drawbacks.
The upfront cost may be out of your budget
Every dollar counts. In the present moment, your business may be better off spending its funds on marketing, new team members, and other growth-drivers.
The tech you purchased will eventually become outdated
Technology evolves at a rapid pace. Sooner or later, the equipment you buy will become outdated, putting your business on the backfoot.