Setting up a successful lab is no easy feat. From PPE to pathological equipment, the list is endless, and the money involved can seem staggering. One option that’s helping a lot of start-up labs is equipment leasing. The options are limitless – you can hire blood bank analysers, osmometers, and even automated immunohistochemistry strainers.
The fact is we live in a rental age. Sharing of information and data is making access to improved tools and research even easier and the ability to rent equipment is opening opportunities for a variety of teams, regardless of their size or budget. Physics historian Peter Galison makes the claim that tools are an even greater driver of scientific revolution than ideas. Equipment is so influential to scientific progress that if access to it is limited, it can be emotionally frustrating and restrictive to research. At the same time, lab equipment is not cheap to get your hands on. It’s constantly updating and therefore becoming outdated and there are expensive pieces of kit that you need only for a few short studies.
So, what is the answer?
Renting and leasing lab equipment.
The Benefits of Leasing Equipment
Renting or leasing lab equipment is not a new idea and it’s helping hundreds of labs to easily jump into the 21st century of research. What are the benefits that come from renting lab equipment?
- Cost. The upfront cost is reduced dramatically by spreading the cost over a longer period of time. This makes the equipment much more affordable and accessible. Additionally, you have the potential to pay for the equipment with 100% tax deductible payments which means you make significant cash savings. You can conserve your working capital more easily, giving you the funds that you need to invest in the important business and operational needs at the core of your work.
- Time. Machine downtime is minimised as maintenance and repair are often included in the rental agreement. The administrative process is simplified as there is less work involved in procuring the necessary equipment which further saves a lot of time.
If there are so many benefits, what are the options?
Finding the Best Leasing Option for Your Needs
There are many different leasing options so it’s important to find one that will suit your needs and your budget. Each option has pros and cons so it will take some time to consider your team’s needs and accommodations that need to be made for the cost of the equipment. There are many factors involved in deciding whether to buy or rent equipment and within the option of renting there are further decisions to be made regarding the type of lease you take out. With time and effort, you can decide on an option that’s ideal for you, your team, your budget and your research.
Operating Lease – An operating lease is a great option for lessees looking for a short-term, flexible solution. You don’t take on the risks of owning the equipment, but you also don’t get the perks of owning it. At the end of the rental term, you have the choice to either return the equipment to the lender, renew the same rental at a lower price or buy the instrument outright for the value it now has. When you pay monthly under the terms of an operating lease you’ll often be able to claim back the tax which will bring you greater financial savings. It’s also great for equipment that has a shorter lifespan or is likely to be updated regularly. Problems arise if you need customised equipment – as you will not own the item outright at the end of the contract, you can’t make any changes to the device.
Sale-leaseback – If you’ve just paid out to own an item outright, some rental companies will offer you cash for the equipment and convert the purchase into a long-term rental. This will help you to free up some of the money in your budget rather than sinking it into one permanent asset.
Capital lease – sometimes these are known as rent-to-own leases and as the name suggests, ownership is transferred from the lessor to the lessee at the end of the contract. While this means you will eventually own the equipment outright, the interest rates are often higher so the monthly cost will be considerably more. Furthermore, by the time you own the equipment, there may be an updated version that you would rather start using. With this in mind, only choose a capital lease for an item that is not subject to frequent upgrades. If you’re considering a capital lease, make sure that the payments include the same services and warranty that would be included in an outright purchase. Eventually, this equipment will be yours, so you want to know that it has been looked after, repaired, and regularly maintained.
The Downsides of Renting and Leasing Lab Equipment
To truly examine the options, we need to look at the downsides to renting or leasing lab equipment. While the pros are many, there are cons that you need to consider:
- While the upfront costs are considerably more appealing, the cost over time may work out higher. With the additional interest to take into consideration, the cost over the period of the lease may ultimately end up being more than if you have just bought the equipment outright in the beginning. Of course, it’s harder to prepare and accommodate for bigger upfront expenses so even though a monthly payment works out more expensive in the long run, it’s more manageable and friendly to the budget.
- Another downside comes from the contract. You are tied into that lease for as long as you initially agreed even if you end up using the equipment a lot less than you first imagined. This might eventually become a costly and unnecessary expense that you are committed to paying until the end of the term.
Whether you choose to buy, rent, or lease, each option serves a valuable purpose. It’s just up to you as to which path you will take.