you need to stay on the cutting edge of computer technology, you may
that it's less expensive to lease than it is to buy by
Alan Zisman (c) 1996 First published
in Business in
Vancouver , Issue #336 April 2, 1996 High Tech
your business replace its computers and other high-tech equipment?
Do you find it frustrating that just when you get used to using one
level of technology, it becomes obsolete? A decade or more ago, Intel
co-founder Gordon Moore suggested that
power was doubling every 18 months and this trend--now known as Moore's
Law--shows no sign of letting up.
We may not
to upgrade that often: many users continue to be highly productive
on old equipment, especially if their needs haven't really changed.
That old 286 or Mac Plus may be all you really need if all you're
doing is word-processing with Word Perfect 5.1 or MS Word 3.0.
perhaps you need
to be able to produce sleek page layouts or professional-looking
or you want to connect to the Internet. You may be able to justify
replacing your computer every two or three years, but taking that
cash-flow hit can be a problem, especially if it's not just one
you have to replace, but dozens or even hundreds at a time.
it will be replacing its computers every couple of years, leasing
may be a practical alternative to purchasing. This minimizes the
crunch, evening it out over the period of the lease, and the monthly
payment, like rent and other business expenses, can be a tax writeoff.
companies offering plans for computer leasing. Terms range from one
year to longer periods, with two-year leases being common. For example,
suppose your business wanted 15 Pentiums, each with a value of
total outlay of $37,500. Depending on the plan, your cost for a
lease could range from about $1,725 to $1,850 per month, leaving you
at the end of that period with the choice between buying your leased
equipment for an agreed price or starting afresh with a new lease
on more modern equipment.
support and maintenance costs, especially if you no longer have to
take care of a wide range of models of equipment purchased over a
number of years. It ensures that all your hardware is reasonably
and able to run the newest software. Your lessor should take
for ensuring that the equipment continues to work over the lifetime
of the lease.
transactions, read the fine print: not all leases are equal. Make
sure that service covers the life of the lease, not some shorter
Watch the total cost--a little simple math should tell you whether
the total of your monthly payments ends up being higher than the value
of the equipment. (Make sure the value placed on the equipment is
realistic.) If not, would you be better off taking out a bank loan
and purchasing the equipment?
often stolen: if you lease one, are you at risk of being stuck with
carrying the cost of the lease for a computer you no longer have?
Shop around, read carefully, and check with your accountant, tax
a final advantage
of leasing is that you don't have to deal with getting rid of your
old equipment. Many businesses have closets and storage space filled
with stacks of older computers. If you lease, the equipment is simply
returned at the end of the lease.
(If you do
still-functional computers, you may want to contact the Computers
for Schools project of the Science Council of B.C. at 438-2752
or email@example.com. Project volunteers refurbish donated computers
for distribution to schools throughout B.C.)
of change, buying may mean being stuck with obsolete equipment, and
for many, leasing may prove an attractive alternative.