How to use the tool rental vs buy calculator
- Enter the rental price per day and any one-time rental extras such as delivery or a damage waiver.
- Enter the price to buy, including sales tax. If you could sell the tool afterward, enter its resale value.
- Type the days you expect to use it to see which choice costs less for your project.
- Read the break-even day count and the first day on which buying costs less.
Formula
Net cost of buying = price to buy - resale value
Cost of renting for n days = one-time extras + daily price x n
Break-even days = (net cost of buying - one-time extras) / daily price
Buying costs less from the first whole day after the break-even point
When the break-even is a whole number of days, renting and buying cost exactly the same on that day and buying becomes cheaper from the next day.
A $60 a day rental against a $300 tool
Renting at $60 a day against buying for $300 with no resale value breaks even at 5 days, because 5 x $60 = $300. On day 5 the two cost the same, and from day 6 buying costs less. For a three day project, renting costs $180 and buying costs $300, so renting saves $120.
If the daily price were $70, the break-even would be $300 / $70 = 4.29 days, and buying would cost less from day 5. For a ten day job buying would save $400, since ten days of rent is $700.
What changes the answer
A resale value lowers the true cost of buying, so a tool that holds its price tilts the decision toward owning. One-time extras such as delivery do the opposite for renting only if they are charged on every rental, so enter them if you expect to rent more than once.
Weekly and monthly rental rates are often cheaper per day than the daily rate. If your shop offers one, enter the daily equivalent for the length you need, then compare.
What the break-even leaves out
Storage, maintenance, transport, the chance you will need the tool again and the chance of an unavailable rental are not counted. A tool you will use several times a year usually changes the math, which you can test with the cost per use calculator.
For equipment bought for a business, the lease vs buy equipment calculator adds financing, and the break even calculator covers units and fixed costs.
Assumptions and limits
- The daily rental price is the same for every day you rent, with no weekly or monthly discount.
- Resale value is what you could actually sell the tool for after use, which you estimate.
- Sales tax is included in the price to buy if it applies, and tax on the rental is included in the daily price.
- Purchases, rentals and sales are assumed to be available when you need them.
Frequently asked questions
How many days of rental equal the cost of buying?
Divide the net cost of buying by the daily rental price. The tool does this after subtracting resale value and one-time rental extras and shows the first day on which buying costs less.
Should I count resale value?
If you plan to sell the tool and can estimate a fair price, yes. It lowers the real cost of owning. Leave it blank if you expect to keep the tool or if it would be worth little.
What if the break-even is not a whole number?
The tool shows the exact figure and the first whole day on which buying becomes cheaper. For 4.29 days, for example, owning is cheaper from day 5.
Does this account for how often I will use the tool?
It compares one project at a time. If you will use the tool again, the number of future rentals you avoid is what makes owning worthwhile, so consider that separately.