Should you rent or buy heavy equipment?
Owning an excavator, loader or crane costs money every month of the year: depreciation, the cost of the capital tied up, insurance and certificates, even when the machine stands in the yard. Hiring costs nothing when you do not need the machine, but each month of hire carries the hire company's own costs and margin. The answer depends on how many months a year you need the machine and how many hours it runs in each.
The calculator puts both on the same basis: the cost of a year with the months and hours you enter. It shows which is cheaper, by how much, the break-even months from which owning costs less, and the highest monthly hire rate at which hiring still wins.
Why is the decision often wrong?
- Comparing the monthly rate with a loan payment. The payment leaves out insurance, maintenance, the operator and the cash you put down.
- Counting the busy months only. An owned machine keeps costing in the months between projects.
- Different terms on each side. A hire rate with operator and fuel compared with an owning cost without them, or the reverse.
- Forgetting the small print. Hours above the monthly allowance, delivery and collection for each hire, and when the hire period starts and ends. The CPA model conditions, for example, start the hire when the plant leaves the depot.
What inputs do you need?
| Input | Where to find it | Tip |
|---|---|---|
| Months and hours needed | Project schedules, the hour meter, tracking data of similar machines | Use measured hours, not the shift length. |
| Hire rate, hours included, extra hours | Two or three written quotes | Ask for the same terms in each quote. |
| Delivery and collection | The quote, or your own lowbed cost | Count each separate hire. |
| Price, resale value, years | Dealer quote, used-equipment listings | Be careful with resale value: it moves the answer most. |
| Insurance, certificates, other fixed costs | Insurer, inspection company, yard costs | They run all year. |
| Maintenance, fuel, operator | Workshop records, fuel log, payroll | Use the same fuel and operator figures on both sides. |
How is rent vs buy calculated?
Cost of hiring for the year
Cost of owning for the year
The costs of owning are depreciation, interest, insurance and housing, and the operating costs are fuel, repairs and labor, as Penn State Extension sets them out. The cost of capital on the average investment is the same method as Safee's Equipment Hourly Cost Calculator; Purdue's example uses a capital recovery factor instead, which gives a slightly different figure.
Break-even months
This is the structure of Purdue's break-even for owning machinery against custom hire: the use at which the owning costs that do not change are covered by what each unit of use saves. Below the break-even, hiring costs less; above it, owning does.
Sources
- M. Langemeier, Self-Propelled Spraying: Machinery Ownership versus Custom Hire, Purdue University Center for Commercial Agriculture, September 2017 (costs of owning and operating, and the minimum use that justifies owning). Source: Purdue.
- M. Lunak, Ownership or Custom Hire: Costs to Consider, Penn State Extension, updated 29 March 2024 (fixed and variable costs of owning). Source: Penn State Extension.
- Construction Plant-hire Association (UK), Model Conditions for the Hire of Plant, July 2011, clauses 1(b), 18, 21 and 23 (hire period, hours, minimum hours, travel charges), as an example of the terms to check in a hire contract. Source: CPA conditions (copy published by a hire company). Last reviewed 21 October 2026.
Worked example: an excavator needed six months a year
The defaults are examples; replace them with your quotes and costs.
- Hire at $7,000 a month with an operator, 260 hours included, $1,100 delivery and collection per hire, two hires a year. At 200 hours a month there are no extra hours. Fuel is not included: 18 L/h × $0.44 × 1,200 h = $9,504. Hire: $53,704 a year, $44.75 per engine hour.
- Own a $160,000 machine sold for $40,000 after 7 years: depreciation $17,143, cost of capital 6% × $100,000 = $6,000, insurance and certificates $3,200, other $1,600, so $27,943 of fixed costs. Running for 1,200 hours: maintenance $9,600, fuel $9,504 and the operator $9,600. Own: $56,647 a year.
- At six months hiring is $2,943 cheaper. Each extra month of hire costs $8,584 against $4,784 for an owned machine, so owning catches up after ($27,943 − $2,200) ÷ $3,800 = 6.8 months.
- Hiring stays cheaper at six months as long as the monthly rate is below $7,490.
How to read your results
- Break-even months: if you are sure to need the machine longer than this every year, owning costs less. If not, hire.
- Close to the break-even: a month either way changes the answer, so let other factors decide: availability of hire machines, operators, and your project pipeline.
- Highest hire rate: a quote above it makes owning the cheaper option at your use.
- Fixed share of owning: the higher it is, the more owning depends on keeping the machine busy.
Before you decide
- Measure real hours: machines often run fewer hours than the shift suggests. Track active time on similar machines for a few months.
- Compare equal quotes: the same hours included, operator, fuel, delivery and breakdown terms.
- Check hired hours: reconcile the supplier's timesheet with your own records in the Equipment Timesheet template.
- Test the resale value: run the calculator with a lower resale value to see how sensitive the answer is.
Assumptions and limits
The calculator compares one year. Owning fixed costs are spread evenly over the years you keep the machine, and the operator is paid only in the months the machine works; if you keep the operator all year, add the idle months to the operator cost. Hire costs do not include breakdown allowances, standby or damage charges, which depend on the contract. Taxes, financing structures and the value of having the machine available at short notice are not included. All defaults are examples, not market rates.