AV Police Squad

Buy Or Lease? Don’t Throw Your Money Away

I remember asking my friends what they thought about leasing a car. The answers I got back were so passionate and aggressive, you would have thought I asked them what they thought about healthcare. “If you lease, you have no equity. You have nothing to sell when you’re done with the car. If you lease, you are THROWING YOUR MONEY AWAY!” “Leasing is hassle-free, why would you buy something that drops 25% in value when you drive it off the lot? If you buy, you are THROWING YOUR MONEY AWAY!” Clearly, there are pros and cons to either method of attaining a car. More and more, this choice of buying or leasing is creeping into how we offer AV systems.

There is the obvious comparison, where manufacturers offer hardware leases for conference technology. You pay a monthly amount, and if there is anything wrong with the technology, you simply send it back and get a replacement. Also, after a few years or months, you get replacements on the technology with the new current models. It would appear that the support on leased equipment is better, since you don’t actually own it and the manufacturer is responsible for it as long as those monthly payments continue to roll in. The economics of it is interesting. Typically, the monthly payments add up to the purchase price of the equipment after about two to three years. So, if your systems get refreshed every two or three years, there is little difference in “price.” If your systems tend to last longer, you will pay more money eventually, but have a much lower initial outlay of cash. Of course, there are tax and interest considerations as well, so it is not completely cut and dry.

There are also not so obvious buy/lease options with AV as well. Think about the Software as a Service (SaaS) model solutions several manufacturers are adopting. Instead of selling you a control solution, they offer a subscription to a control solution. The economics here aren’t as clear cut as the hardware example. It is difficult to compare the costs of a client-owned solution compared to a SaaS solution, because they often aren’t offering the same features. However, the SaaS solution grows with system changes much easier than a client-owned solution. As systems evolve or new features are offered/required, the changes can be applied automatically instead of requiring an on-premises system update. However, the actual value of some of those new features are often difficult to determine, as in “but ours goes to 11!”

I also see AV support services moving more to a lease or retainer or SLA offering as well. Instead of hiring a service provider per job or filling a permanent staff position, many AV folks are offering “partnerships” with a monthly fee. In fact, many integrators are moving to a subcontractor model of doing business, where they maintain a small staff and bring on subcontractors only when projects deem it necessary. If the client or integrator needs design work, system upgrades or service, instead of initiating a new project in their procurement system, they just tap their AV partner for a few hours here and there. Instead of hiring (“owning”) an AV team, they simply lease one for when they need it.

I am not sure which method of offering AV is better. I do see a trend in minimal ownership around the world. I remember wanting to own as many VHS movies as possible as a kid. Now everything I could ever hope to watch is available in the cloud. I remember owning a cell phone that I could pass on to my kids to play with once I got a new one. Now many cellular providers are pushing leased phones with their plans. Some would argue that with the potential price drop of driverless Uber around the corner, there won’t even be a need to own a car. It will just make more sense to hire an Uber, since it could be safer, cheaper, and way less hassle. I could hear the new arguments now: “Why would you bother to lease or buy a car. You’re just THROWING YOUR MONEY AWAY!!!!”

As technology continues to become commoditized, and refreshed more quickly, I’m not sure owning things makes much sense any more. I’m also not sure how I feel about that.

Previous ArticleNext Article

Send this to friend