Equipment Rent vs Buy Calculator

1. Enter the purchase price, the resale value you expect at the end and how many years you'd keep the machine.
2. Enter your loan rate or what your cash could otherwise earn, plus yearly fixed costs such as insurance, storage and routine servicing.
3. Enter the rental day rate and the days per year you actually need the machine to see which is cheaper and the break-even days.

Quick answers

How is the break-even number of rental days worked out?

Yearly ownership cost ÷ rental day rate. Own per year = (price − resale) ÷ years + (price + resale) ÷ 2 × rate + fixed costs. A $65,000 machine resold for $30,000 after 5 years at 7% with $3,000 fixed costs costs $7,000 + $3,325 + $3,000 = $13,325 a year; at $350/day that breaks even at about 38 days.

What does the result mean?

If you need the machine more days than the break-even, owning is cheaper on these inputs; fewer days and renting is. Near the break-even, small changes in resale value or rental rate can flip the answer.

Edge cases and limits

• Count only days you'd really rent; idle days you'd use 'because you own it' don't make buying cheaper.
• Fuel and operator time cost the same either way and are left out; rental delivery fees or minimum rental periods are not, so fold them into the day rate.
• For a fuller ownership picture with fuel, repairs and per-hour cost, use the Equipment Total Cost of Ownership Calculator.

Owning has a fixed yearly cost whether the machine runs or not; renting costs only on days used. The break-even point is the number of rental days that equals one year of ownership cost.

• Depreciation = (price − resale) ÷ years
• Cost of capital = (price + resale) ÷ 2 × rate
• Own per year = depreciation + capital cost + fixed costs
• Rent per year = day rate × days
• Break-even days = own per year ÷ day rate

The cheaper option compares a full year of ownership cost against rental at your expected usage. The break-even days tell you how much use justifies buying.

Common mistakes and assumptions

• Ignoring the cost of tied-up capital.
• Overestimating days of use.
• Forgetting rental delivery and damage-waiver fees.

A $65,000 skid steer kept 5 years, resold for $30,000, at 7% with $3,000 a year in fixed costs, versus $350/day rental for 40 days.

1. 1Depreciation = 35,000 ÷ 5 = $7,000.
2. 2Capital cost = 47,500 × 0.07 = $3,325; owning = $13,325 a year.
3. 3Renting 40 days = $14,000, so buying saves $675 a year; break-even is 13,325 ÷ 350 ≈ 39 days.

When should I rent instead of buy equipment?

When you use the machine fewer days than the break-even point, need a specialty machine occasionally, or want to avoid storage and maintenance.

Why include cost of capital if I pay cash?

Cash tied up in a machine can’t earn a return or pay down other debt. That opportunity cost is real even without a loan.

What about tax depreciation?

Tax treatment varies by jurisdiction and business. This compares economic cost only — ask your tax adviser about write-offs.

How is this different from the Equipment Total Cost of Ownership Calculator?

TCO details every ownership cost including operating costs; this tool focuses on the rent-or-buy decision and break-even utilization.