Pros and Cons of Leasing Laboratory Equipment
Deciding on the right equipment for your lab space or new project can be a lengthy and complicated process. It requires you to carefully scrutinize your budget, time constraints and current contracts. While the vast majority of laboratories still invest in lab equipment outright, there is an increasing trend towards leasing as well.
Whether you elect to lease or buy, it’s important to know the benefits and the downsides. This will enable you to make an informed decision and make your project and workflow a success.
Advantages of leasing equipment:
Less initial expense
Leasing equipment offers a fair amount of flexibility, with costs normally split into lower more manageable monthly payments due over a fixed period of time, and no down payment required. The leasing payments are often lower than the payback would be on a traditional loan if you were to purchase the equipment. Small companies, start-ups, and even established firms can gain from leasing as they can acquire new equipment without tapping too far into their cash flow.
You should speak with your accountant to understand any advantages that may apply to leasing lab equipment verses buying it.
Scientists working on a short or one-off project would benefit from leasing because they would only need the specialized apparatus or machinery for a limited time frame. Investing long-term in a piece of equipment in this scenario would not be beneficial as the equipment would need to be sold or discarded after the project is completed.
Cutting edge technology
Technology in this sector is constantly evolving and developing. What is today’s new product can quickly become out of date in less than 5 years. Leasing allows laboratories access to the latest technology and even higher standards of equipment.
Try before you buy
You may still want to purchase the equipment eventually but want to test it out first. Leasing gives you that opportunity.
Predictable periodic payments
Often when you lease equipment you have the option of making convenient monthly payments over a period of time, instead of paying for the full cost of the device up front.
Keeping up with your competitors
Leasing equipment enables you to acquire the latest technology that may otherwise be too expensive. This would enable you to keep pace with your competitors at a lower up front cost.
No maintenance costs
If already agreed by the leasing company, they can take care of the maintenance and servicing of the apparatus, meaning you save money on its overall upkeep and know what your monthly costs will be.
Drawbacks of leasing equipment:
Unless the equipment does become obsolete, not owning it means you don’t build equity within it.
In some cases you are responsible for the upkeep and maintenance of your equipment according to the leasing company’s specifications, whereas if you own it, you can determine the maintenance terms and associated costs.
Buying is usually a more simple process, with less paperwork. Leasing companies require more detailed financial information, an approval process and agreements which can be time consuming and complex.
Long-term leasing can be more expensive
Although leasing is usually cheaper in the short term, equipment frequently costs more in the long-run if leased, rather than when it is bought outright initially.
Depending on your agreement with the leasing company, you may be obliged to keep on paying up until the end of the original lease period, even if you have to terminate your lease early because you no longer need the device. It is vital that you understand the contractual terms and conditions before you sign on the dotted line.
Additional insurance costs
Some leasing companies may include supplementary charges to cover insurance of the equipment.
Depending on your particular situation you have to weigh the advantages and disadvantages in order to make the best possible decision for your company. There is no right or wrong answer, but it is important to be informed regarding both the economical and practical factors before making a commitment.