Lease vs Buy

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01Jul2010

Lease vs Buy

  • By Andrew Garrett
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One of the common issues we deal with with our clients, is whether to lease or buy IT equipment.iStock_000009466110XSmall.jpg

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Like amy of the things we deal with, this isn’t an IT decision. It’s a business decision.

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Leasing on a per machine basis, assuming you’re paying for it out of cash funds, costs more than buying.

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For most organisations, in most cases, buying is going to be a fiscally better option than leasing.

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That said, there are a few circumstances where leasing may well be a better option for you.

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If you’re cash-poor but future-profit-rich (that is to say, if you have a shortage of funds in the bank, but plenty of work in the future, with definite profit in the coming months and years), then leasing hardware lets you pay for it as you use it. Rather than paying for your hardware out of past earnings or capital investment, you pay for it out of future profits.

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If you’re anticipating significant change, and not sure what your needs are going to be. If there’s a downsizing exercise in the future, or maybe a merger, then it may not make sense to buy (for example) new computers for 20 staff, when you know 10 of them won’t be around in 6 months.

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If you can get the leasing as part of a deal from your service provider *and* it makes financial sense. Some IT Service providers can bundle equipment leasing as part of their services – which means they take on responsibility for maintaining spares and replacing failed equipment in line with the Service Level Agreement that you put in place.

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Similar to the last item, hardware hosted off-site is often supplied by the hosting company. Rather than you buying a server, you lease a server (or, increasingly, a virtual server) as part of your off-site hosting package. Putting your own server into a hosted environment creates a lot more work for the hosting company, and as such, is generally a lot more expensive.

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We regard buying computers to be the default choice. Nevertheless, we look for situations where it makes the most business sense to lease.

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