"If it's going to cost me that much to rent the stuff, I should just buy it myself".   Maybe you should. Or, maybe you shouldn't. This month we explore the rent or buy conundrum as it relates to entertainment technology in a fun and entertaining TOP 5 format. Scharff Weisberg Inc, being a rental, sales and authorized service agent for the major equipment brands will try to be as objective as possible.

TOP 5 FACTORS THAT AFFECT THE BUY OR RENT DECISION

FACTOR 1 - Best Buy has good prices on the gear you need.

If you can buy what you need at a consumer electronics outlet you probably should not even check the rental prices; and, no, this is not as absurd as it sounds. Flat-screen monitors, projectors, Blu-Ray DVD players, all available at local outlets, can handle many short-term projects adequately. However, if your project is going to last more than a month or two, I caution against using consumer or prosumer equipment, as it is not built for intense or lengthy duty-cycles.

FACTOR 2 - The equipment you purchase will generate enough revenue on it's own to justify the cost of ownership.

If you're a movie theater operator, the equipment you own will generate the income you need to cover the costs of ownership, which typically include financing, amortization, insurance, service and maintenance. For many of our clients however, equipment use is tangential to the client's business, so there is less justification for paying the cost of ownership.  Plus, that cost of ownership is significant once all the factors listed above are included in the purchase price.

FACTOR 3 - You know for sure that your project will fully amortize the purchase.

Remember, the root word for "amortization" is related to the Latin word for death (mort), not the Spanish word for love (amor). Assuming the use of the gear is not directly generating revenue, the owner should fully depreciate the equipment purchase over its lifetime - usually five to seven years for ET - or end up paying a premium on a purchase.

I've seen numerous examples of equipment purchased for a project given up after two years with little or no market value and a loss to the owner. However, for owners who have the capital wherewithal to withstand potential losses, a purchase may be well worth the risk.

FACTOR 4 - The application will not tolerate equipment outages

If the gear is used in an application that will tolerate occasional equipment-related failures, let's say an academic application, you may be a candidate for a purchase. If usage is not fault-tolerant, for example a theatrical performance, you may need the muscle of a rental company to support you.

To take the concept one step further, if the equipment is purchased and there is an equipment failure, the basis for relief is the manufacturer's warranty, which relies on authorized service agents or the manufacturer to fix the problem. This avenue is not known for having a time-of-the-essence approach and can lead to frustration. In a rental scenario, it is the rental agent's obligation to fix or replace defective equipment so that usage is not affected. Simple put, the responsibility for keeping the gear working lies with the owner - whether that's the purchaser or the rental company.

FACTOR 5 - The technology is new or pushing the envelope

In applications where the technology is being used in unusual or innovative ways, equipment purchase can present numerous risks. If, for example, the equipment doesn't perform as expected and an alternate is necessary, a rental company may be able to find a home for the originally specified equipment and locate an effective substitute. In addition, rental companies typically have very close relationships with manufacturers, as we often end up being the "beta-testers" for new products (whether we like it or not) and we often work hand-in-hand with product developers on new products. These relationships provide big dividends when the head scratching starts.

Follow-up - Education Email

I received a much larger than usual response to my last email discussing education and training opportunities for technical positions in our industry and I will present a synopsis of the many thoughtful responses in next month's email.