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Thinking of Buying Equipment? A Cost-Benefit Analysis is Exactly What You Need

Thinking of Buying Equipment? A Cost-Benefit Analysis is Exactly What You Need

If you have a growing business, and have been hiring equipment for a while, you may reach a stage where you consider buying aerial access or material handling equipment. Would owning a machine be more cost-effective and convenient?

The purchase of a scissor lift, boom lift or forklift is not a small decision. Material handling equipment and aerial access unites don’t come with small price tags. You need to be sure, firstly, that you’re getting the best equipment for the job at hand. Secondly, you need to know that owning the equipment will be better for your business bottom line than hiring. In addition, there are tax implications you may not even have considered.

Auslift’s cost-benefit analysis 

Auslift is well-versed in assessing what businesses need when it comes to material handling equipment and aerial access units, and we understand calculations may be a challenge for businesses to make. That’s why we’ve created a unique cost-benefit analysis we use with you. It provides a clear framework for helping you weigh up the myriad of factors that come into the decision.

Below is a list of some (but not all) considerations that form part of our cost-benefit analysis.

Choosing the right machine

Whether you’re hiring or purchasing a scissor lift, boom lift, or material handling equipment like a forklift, you need to know you’re getting the right machine for the job (or jobs) at hand.

In terms of choosing the right machine, considerations include the following.

Is the machine fit for application?

Can it practically perform the tasks you need it to perform? For example, if you need your boom lift to lift more than 130 feet, a standard boom might not suffice. You might need to choose a telescopic boom lift in order to reach the desired height.

Loads

Can the material handling equipment manage the kind of loads you need it to lift, and safely? Can that scissor lift carry the weight of your workers?

Size

Is the machine the right size for the job? Do you need something bigger? How will you transport and store it?

Location

Will the machine be used indoors or outdoors? If outdoors, what sort of terrain will it be used on? (Different machine models handle terrains differently.)

Safety

Can the machine be safely used in the worksites you’re working in? Could you count on it to keep your workers safe?

Profitability

Will the machine be profitable? Will your business require its use often enough to ensure it’s worth investing in? Will transport and storage costs be reasonable?

Machine brand

Brand can be a consideration, however matching the machine to the job is more important, especially if you’re picking from a collection of solid, quality brands. (Auslift stocks a selection of leading brands of scissor lifts, boom lifts, cherry pickers and forklifts. We don’t promote any brand over another—rather, we assess your needs and match you with the most suitable machine out of our extensive range.)

Buy or hire

 

As part of Auslift’s cost-benefit analysis, we examine whether you’re better off to continue hiring equipment, or buy outright. Factors as part of this decision are as follows.

How often do you need the machine?

If its use is only sporadic, you might be better to continue hiring as needed.

If you use the machine daily, buying might be better in the long run. (We help you calculate this.)

How would you transport and store your equipment?

Compare the cost of transport fees as part of equipment hire (often more than the hire fee itself) against what it would cost you to transport and store the equipment yourself. What works out to be more economical? Do you have storage space and a truck already, or would you have to acquire these too?

Can you afford to maintain your equipment?

If you own a machine, you need to pay to maintain it. Maintenance may cost you more if you buy used equipment that’s passed its warranty period. (Note, you may be able to claim a tax deduction on equipment repair down the track, though repair can’t be claimed for newly purchased equipment. See the ATO information here.)

Can you afford to buy it?

You’ll need to look at the cost of equipment, and whether or not you can claim any deductions on it over time, to determine if you can afford a machine. (Visit the ATO for more information on claiming deductions for depreciation on equipment.) You then will need to look at how often you use it, and other costs associated with keeping and maintaining equipment, to arrive at a final cost estimate. (This is where the cost-benefit analysis comes in handy.) Once you’ve done your calculations, you can see if your business has budget for the equipment, or if you would need financial assistance.

Note, it’s important to include your own machine as part of any invoice you create for a job. Oftentimes businesses include the equipment-use for a hired machine as part of an invoice, but forget to invoice for use of their own equipment. This makes keeping track of how profitable your machine is difficult.

It’s important to clearly invoice for the use of your own equipment, as this helps when keeping a record of running costs, helps towards covering repayments, and also helps at tax time.

Used or new

 

Once you’ve decided what type of machine you want, and decided you want to purchase, you then have the choice of whether to buy new equipment, or equipment that’s already been used.

The obvious advantage of buying used equipment is that it will be cheaper.

The advantage of buying new is that the equipment will still be within its warranty for a while, so if repairs are needed soon after purchase, the warranty should cover them.

New equipment will be more expensive, though, so it may come down to your budget. If you need to weigh up buying new or used equipment, we write a blog about it! See Buying New vs Used Equipment.

Try before you buy

 

Remember you can often try out equipment before you buy it. This can help you know you’re making the right move in regards to the model of machine and whether it performs well on the job.

Read our blog post on Try before you buy access equipment, which applies to aerial access and material handling equipment alike.

Auslift offers a try before you buy program that allows you to hire the machine and use it in your work environment for 1 week. You get to check the machine does what you need it to do, and if you decide to purchase it after the trial period, hire fees are taken off the purchase price of the unit.


In summary, if you’re on the verge of purchasing new equipment, but need help to be sure you’re doing the right thing, contact Auslift for our cost-benefit analysis. It may be the tool you need to comfortably progress with your decision and move your business forward.