The option of renting things instead of buying them is being offered in more and more areas, both in the private and B2B sectors. There are more and more providers on the market, especially in the field of technology. We therefore took a look at when the rental model is actually worthwhile.
Rental offers for private use
Borrowing an item that you rarely use only for the period for which it is needed sounds logical and has been practiced for a long time. Few people would think of buying a car that is only used once a year. In the electronics sector, the rental concept is only slowly becoming established. Many devices are still bought, even if they are rarely used. A classic example is the printer.
Large retailers or start-ups specializing in rentals now want to change this and enable private customers to use laptops, smartphones or televisions on the basis of a monthly rental fee.
However, the conditions of the individual providers are quite different. The decisive factors are the (minimum) rental periods and the prices. With one of the well-known providers, the current 13-inch MacBook Pro is available from just under 80 euros per month with a minimum term of 12 months. This means that around 1,000 euros are due for annual use. This compares to a purchase price of around 1,500 euros. If you plan to use the device for longer than 1 ½ years, renting no longer offers any financial benefits (subsequent resale is not yet taken into account).
Conclusion: The intended use is decisive
It therefore depends on the specific application. For example, if you have a specific device in mind and would like to test it intensively before buying, the rental model gives you the opportunity to do so. The only requirement is a correspondingly short minimum rental period from the provider. The same applies if the device is only needed for a short period of time for a specific project. Here too, the total cost of renting is lower than buying. But what does this mean for the rental model for companies?
Renting hardware for companies - it's the service that counts
The range of rental options for companies is also growing. In addition to office furniture, e.g. desks, chairs and cabinets, hardware can now also be rented flexibly in order to optimally equip workstations. If you only look at the price, it is also true for business offers that renting is less profitable than buying over a longer period of use. The prices are usually lower for corporate customers. However, buying is usually cheaper for very long periods of use. However, other factors play a role in the business context that are generally not relevant for private individuals.
Latest technology
When renting hardware, providers always make the latest technology available. This means that employees are always working with the latest technology. Product cycles are very short, especially for products such as laptops, smartphones and tablets, and new models are released every year. Equipping workstations with new devices on a regular basis would mean an enormous financial and administrative outlay when purchasing them. For this reason, when you rent hardware with Lendis, you automatically receive an upgrade to the latest model at the end of the initial rental period, after 24 months at the latest.
Service offer
In the B2B sector, the product range is usually supplemented by a comprehensive range of services. This includes free and fast delivery of devices or the pre-installation of required software. Defective or damaged devices are replaced within a short period of time so that employees can be productive again quickly. Business customers don't have to worry about anything once the rental is complete and employees are immediately ready to get to work.
Respond flexibly to demand
The ability to react quickly to changes is very important for companies. The rental model provides additional flexibility. If demand increases, for example due to new employees, additional technology can easily be rented. If devices are no longer needed, they can simply be returned. It is also possible to change devices in this way.
Securing liquidity
Companies also benefit from the financial advantages of hardware rental. Instead of high one-off costs for the purchase of required hardware, only small monthly amounts are due when renting laptops & co. This reduces the cash outflow and avoids working capital. The company still has sufficient capital available for other investments. A secure cash flow is particularly important for young companies in order to drive the growth of their core business. But even in times of declining sales, such as the current coronavirus crisis, secure liquidity is vital for the survival of companies of all sizes.
Tax treatment of the rent
The fact that one-off acquisition costs are converted into recurring rental amounts means that, from a business perspective, capital expenditure becomes operating expenditure (more on CapEx and OpEx). Capital expenditure and operating expenses differ in their tax treatment. While capital expenditure is depreciated over time and therefore only a certain amount is recognized in the tax return each year, operating expenses such as rent can be claimed in full for tax purposes in the relevant period.
Administrative effort
One point that should not be neglected is the administrative effort involved in marketing old appliances. While it is still possible to dispose of or resell individual devices with manageable effort, this means an enormous administrative burden for companies. Under the rental model, the provider takes care of the entire process and the customer has no additional work.
Attractive alternative to technology procurement
As is so often the case, it is impossible to make a blanket assessment of whether renting hardware is worthwhile or not. For private individuals, the price is the decisive criterion when deciding whether to buy or rent. If the device is only needed for a clearly defined, short period of time, renting is an attractive alternative. However, as devices such as TVs, computers or smartphones are usually used regularly and for longer than 24 months, buying is the better decision.
In contrast, technology rental is often an attractive and advantageous way for companies to flexibly and affordably equip workstations for employees due to the numerous other benefits. The rental model is the ideal choice, especially for companies that value a comprehensive and high-quality range of services and for which flexibility is important.
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