The choice to rent heavy equipment or purchase them outright is a big decision and largely depends on your usage.
If you need such machines for long-term and recurring purposes — like when you have a construction company — you’ll get the most value for your investment by buying your machinery. However, if you are using them for one-off or seasonal projects, it makes better sense to rent them.
Globally, there is a growing trend towards renting construction equipment. The rental market value is expected to rise from $91.34 billion in 2019 to more than $135.1 billion by 2027. Some of the reasons why even enterprises are opting for rentals include the high cost of machine pickup and delivery, unstable fuel prices, stringent ownership guidelines, and other financial restraints. This is relevant data for local businesses that are working with much fewer resources.
In this article, we take a look at the average cost of renting some of the most-used heavy equipment and then assess when it makes sense to either rent or buy.
Typical Heavy Equipment Rental Rates
What constitutes heavy equipment? These are large, heavy-duty vehicles that are used for construction and earth-moving work. These include tractors, excavators, cranes, bulldozers, forklifts, track hoes, graders, and scrapers. The rental rates vary depending on many factors, such as capital cost, depreciation rate, years of use, maintenance costs, delivery costs, etc. Your usage also matters. Are you renting by the hour, the day, the week, or longer?
While it may sound like common sense, it’s important to know the average costs before you start looking to rent equipment for your project. To give you an idea of what you might find, here are some examples of heavy equipment rental rates in the US:
- Backhoe: $150 to $500 per day
- Bulldozer: $200 to $1,000 per day
- Forklift: $200 to $800 per day
- Excavator: $900 to $1,800 per day
- Boom Lift: $250 to $400 per day
*Note: Most heavy equipment rental companies do not post their rates online, but you request a quote to determine fees. In addition, the above rates refer only to the equipment rentals themselves and do not include the cost of delivery and return, labor, fuel, and other factors.
Buying vs. Renting Heavy Equipment
When does it make sense to rent heavy equipment? The average cost to rent an excavator, for example, would be $1,000 per day, versus the price of a brand new one of $100,000 and up. If you are a construction company that handles multiple projects, investing this much for one piece of equipment would make sense. With frequent use, you can recoup your investment and generate more revenue for your business if you operate using your own machines.
However, if you are looking to complete a short-term construction project and do not foresee future upcoming projects, renting would be a smarter move. Take note that equipment naturally depreciates whether or not you use it. Keeping a machine idle for a long time not only waters your investment down but also exposes your equipment to degradation.
Be Prepared for the Cost of Heavy Equipment with Charter Capital
Money is a key driver in deciding whether to buy or rent heavy equipment, but so are opportunities and risks. If you are a small to medium-sized business looking for a track hoe to use for a building project, you might want to consider comparing track hoe rental prices first. The same applies to any other heavy equipment you would need.
With the high cost of construction, and given the fact that the global construction industry is leaning towards equipment rentals to save money, knowing the prevailing equipment rental rates in your area could be in your favor. If you need the funds to finance or lease heavy equipment, Charter Capital can help. We have assisted many business owners grow and expand with their needed funding to purchase and rent equipment. Contact us to discuss the financing options that will work best for you.