Look beyond the purchase price when deciding to buy vs. rent.
Looking to invest in some new tools for your crews? First, stop and make sure you understand the total cost of the investment. Beyond the initial purchase price, many construction tools carry some hidden costs that may impact your decision to buy vs. rent.
- Maintenance. Even the most basic hand tools need a regular rag cleaning, but more advanced tools require more maintenance. For example, air-powered impact wrenches may need to be checked for leaks, cleaned of moisture that could lead to rust, and oiled to ensure proper performance. Arc welders need oil changes and clean filters, as well as leak checks and inspections for worn hoses. Ignoring these time-consuming tasks can shorten the tool’s lifespan, leading to more frequent replacement costs.
- Repair and replacement. There’s no simple way to know how long a tool will last (quality tools are built to last longer). Read the warranty carefully to know how long the warranty is good for and what it covers — and doesn’t. If a tool breaks and the warranty doesn’t cover the damage, the cost to repair or replace is on you. Of course, repairing a tool won’t make it like new; crews will still be working with an older tool that may no longer be state of the art.
- Tracking. If your tool fleet is large, keeping track of everything you own — and what’s in good repair and what isn’t — can be a job unto itself, one that takes time and therefore costs money. Renting tools, on the other hand, often affords teams the added benefit of fleet-tracking technology.
- Storage. Storing tools requires space, which (again) costs money. The more tools you own, the more storage space you need.
- Insurance. As you invest in more high-tech tools, you may find you need a tool insurance policy that covers loss or damage to investments like, say, your new $1,500 laser level. For more expensive specialty tools, special policy floaters can be added, for an additional expense, of course.
- Theft. The National Equipment Register finds that construction job site theft costs the industry as much as $1 billion each year. Equipment insurance plans can provide blanket coverage of many tools, but more contractors are finding the need to make an additional investment in theft deterrence. Solutions may range from sign-out sheets to motion lighting to secure jobsite storage boxes with controlled access.
- Depreciation. Every year you own your tools, their value lessens. If your tools are central to performing your job, you should be deducting the depreciation on your taxes.
Buying tools, especially expensive ones, also creates an opportunity cost. In other words, because you sunk the money into those tools, you can’t later decide that some of it would be better spent on another investment that would provide more return for your business.
Having the best tools for the job is critical to maximizing productivity. It can even help keep workers happy. But buying them isn’t always the best answer.
Megan Headley has been writing about every aspect of the built environment since 2004. As owner of ClearStory Publications, LLC, Megan demonstrates her passion for helping contractors create more productive and safer job sites, and more sustainable and successful projects.