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Digital Signage: Purchasing outright vs leased vs rental?

Posted: July 20, 2008 at 11:38 pm   /   by   /   comments (3)

A typical digital signage solution is generally expensive and from experience, one of the most critical factors as to whether a client purchases the equipment or not is the final cost (basically the number of zeros in the figure). Even calculating and presenting the ROI may not persuade the client to make that final purchasing decision.

A financial strategy which we believe will help in landing any project, is to also include rental and leased financial options with every quote you submit to your client.

In summary, some of the advantages of rental and leased plans over outright purchases are :

  • preservation of cash flow. The cost of the equipment can be spread over the term of the agreement. This means a full upfront payment is not required enabling the client to spend money running the business.
  • there are many tax advantages. For rental and lease options, both payments are 100% tax deductible. If the equipment was to be purchased outright, only the value of the equipment depreciation is tax deductible. GST can be claimed on monthly payments through BAS claims whereas for outright purchases, GST is only claimed at the time when the equipment purchased.
  • For the rental option, there is a flexibility to upgrade, add or delete the equipment during the term of the agreement. For the leased option, the client may be required to payout the remaining payments and residual value before upgrading to new equipment. For outright purchases, any upgrades or add-ons will need to be required to be purchased by the customer.
  • With the rental option, the client will not be stuck with outdated technology. The equipment can be returned to the Finance company. For the leased and outright purchase options, , the equipment needs to be disposed of by the customer which may prove to be costly.

Visit the digital signage forum to further discuss some of these advantages in detail.
At Advertise Me, they are able to provide their clients with outright, leased and rental options for all of their digital signage solutions.

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Comments (3)

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  • July 3, 2011 at 11:06 am inTouch Display Systems

    This is a very interesting topic. We have found that most businesses prefer that the equipment be provided as a service. This reduces that high upfront cost, while still allowing all signage that is requested.

    Thanks for your discussion.

    John

    Reply
  • May 29, 2010 at 12:21 am DigitalSignageBlog

    Bob, many thanks for the insight. We have been in the digital signage industry for quite a number of years now and we agree with everything you’ve said. For small new businesses, I believe it’s hard to raise capital especially when you don’t have the client base or the portfolio. We were at one stage thinking of heading down the path of looking for investors but didn’t like the idea of giving away a percentage of the company.

    In Australia, there aren’t too many digital signage network operators because the investment capital to setup the network is too high. I have noticed that large advertising companies who already have exposure and the cashflow are actually sustaining this operation (I’m guessing that they are potentially offsetting this cost from their existing print media).

    What do you suggest for new small businesses who are looking to raise capital or even look for financing companies.

    Reply
  • March 19, 2009 at 4:47 am Digital Signage Leasing

    With the new round of LED signage going up, many businesses are again looking to upgrade their existing display(s). While the new LED lighting may be more expensive upfront, the savings are immediate and systems usually pay for themselves in under 3-years. Utilizing an equipment lease to obtain such energy saving equipment almost always makes excellent sense.

    Reply
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Advertise Me is a privately owned Australian company specialising in all aspects of digital signage solutions. Our team of highly...

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