Its easy enough to calculate profit when you lease a piece of
equipment…but how would you figure break even point if you make an
It was suggested to me that X number of jobs at $Y should equal
initial cost. Sounds reasonable enough. But If I’m buying this thingy
outright, shouldn’t I be looking for an increased profit within the
same time frame, over and above what doing it the old way would have
yielded? Should I expect increased profit per job, not just to pay
for the machine, but because profit (now or soon) is what its really
Example…I lease for four years at $600 month or purchase at $20K.
Leasing it I know I have to produce $600 plus operating expenses to
cover the lease. >From then on, during that month I gain profit, it
being gross sales minus lease minus all operating expenses. Per job
price is figured by taking all those costs and factoring in a profit
margin, divide by anticipated volume of jobs… Simple, right?
If I purchase, its much harder, in my feeble mind, to grasp several
things. One, what is the usual time frame to recoup investment? Do I
simply ‘pretend’ I have a lease just so I have some sort of cost/time
perspective? Two, how severely am I effected tax wise if I purchase
vs lease? Should I factor that ‘penalty’ into my price determination
offset by interest savings?
I’m not going to lease. Done with avoidable long term obligations.
Been there, done that, no thank you. But if I have to wait four years
to break even, that doesn’t sound too enticing.
I’m looking to justify this purchase on sound business reasoning not
just cuz I want the darned thing.