Amid Economic Volatility, Should You Buy or Lease Computer Equipment?

By Kristian Tuinzing

Client Services Manager, NPI

May 28, 2020

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With the coronavirus hitting hardware spending harder than many other areas of IT, PC purchasing habits are shifting as capital concerns hit more enterprises. One result that NPI is seeing from our clients is an increased interest in pricing for leasing, and other considerations around this core question: Should you lease or buy PC assets?

This has always been a common query submitted to NPI’s analysts by our clients. But the volume has definitely increased over the past three months as the leasing model becomes more attractive for cash-starved enterprises. Leasing does have its advantages and, in some cases, the right leasing partner can lead to better PC pricing overall. But it requires careful consideration beyond the initial cash outlay.

Here are some factors to consider when weighing the lease or buy decision:

Weigh Specific and High-Level Lifecycle Standards
Outside of having limited cash on hand for capital purchases, leasing can also make sense for firms that need to harness the most cutting-edge PC technology standards. Design firms, media outlets, and other industries depend benefit from more frequent changeouts.

Consider Treating Each Asset Class Separately (Desktop, Laptop, Workstation, etc.)
With or without leasing, NPI still recommends clients consider treating each purchasing subcategory differently. This allows for considerations like lifecycle or buybacks for employees when upgrades are due. Desktops and workstations often have longer viable lifecycles than mobile PC assets, meaning clients may benefit from leasing some while buying others to save on short-term costs.

Review Depreciation and Buyback Terms
Typical GAAP guidance says hardware should last 5 years for appropriate depreciation, but this rule isn’t heavily enforced and can vary with the right justification. Some firms will also allow employees to purchase assets for personal use which leasing agreements can make easier to accomplish. NPI advises weighing the benefits from depreciation against any gains from PC leasing as part of assessments.

Remember – regardless of whether you decide to lease or buy, performing IT price benchmark analysis is more important than ever. Economic volatility and increased demand (among other factors) are impacting pricing disparity across the PC category. Validate whether your pricing is at or better than market to ensure you don’t overpay.