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Equipment ROI Calculator

Decide whether to buy or rent trade equipment — payback period, cost per use, and annual return on investment.

Purchase scenario
$
years
$
$/yr

Maintenance, calibration, insurance, fuel.

Revenue & utilization
$/yr

Inspection fees, billable uses — not total business revenue.

Rental comparison
$

Daily or half-day rental rate in your market.

Buying wins

0.5 yearspayback period

194% annual ROI. $24,200/yr net benefit after ownership cost.
Annual ownership cost$79/use at 48 uses
$3,800
Annual rental cost$185 × 48 uses
$8,880
Annual savings (buy vs. rent)
$5,080
Cost per use (owned)
$79
Jobs to pay back purchase
25
Buy vs. rent comparison
MeasureBuyRent
Upfront cost$12,500$0
Annual cost$3,800$8,880
Cost per use$79$185
5-year total cost$19,000$44,400

Strong buy — payback under 2 years

At 48 uses per year generating $28,000, this equipment pays for itself in 0.5 years. Ownership also gives you availability on demand — no rental shop delays.

What this assumes

  • Annual revenue is gross income the equipment generates, not total business revenue.
  • Resale value is your estimate at end of useful life.
  • Rent cost is local daily/weekly rental rate multiplied by uses per year.

Important

Equipment that sits idle is a liability, not an asset. Factor utilization honestly — a $15,000 trencher used twice a year loses to rental every time.

Understanding the result

Utilization decides buy vs. rent

Rental makes sense below 30 to 40% utilization. A $200/day trencher rental on 15 days a year costs $3,000 — far less than a $12,000 purchase sitting in the yard 350 days. Above 60% utilization, ownership wins on cost and availability.

Payback period is the decision number

Divide purchase price by annual net benefit (revenue minus operating cost and depreciation). Under 18 months is a strong buy. Over 36 months, compare rental cost and consider whether the work will continue.

Revenue equipment vs. cost equipment

A sewer camera generates $400/inspection — revenue equipment with fast payback. A $3,000 press tool saves labor but does not bill directly — cost equipment justified by hours saved. Price both differently.

Common questions

When should a contractor buy equipment instead of renting?
Buy when you use it more than 30 to 40% of the time it would be available, when rental availability causes lost jobs, or when payback is under 24 months. Rent for occasional, specialized, or rapidly-obsolescing equipment.
What is a good ROI on trade equipment?
Target 25 to 50% annual ROI on revenue-generating equipment (cameras, locators, diagnostic tools). Cost-saving equipment (press tools, crimpers) is justified if payback is under 18 months based on labor hours saved.
How do I calculate equipment payback period?
Purchase price divided by annual net benefit. A $10,000 sewer camera generating $18,000/year in inspections with $2,000 operating cost pays back in 0.67 years. Include maintenance, calibration, and insurance in operating cost.
Should I finance or pay cash for equipment?
Finance when the equipment generates revenue that exceeds the payment (positive cash flow from day one). Pay cash for cost-saving tools where the payback is the only return. Interest is deductible but not free.
What equipment has the best ROI for contractors?
Diagnostic and inspection tools (sewer cameras, thermal imagers, combustion analyzers) bill directly to customers at $200 to $500 per use. A camera used twice a week can pay for itself in 3 to 6 months.

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