Key Takeaways for Decision Makers
EQUIPMENT MANAGER: Knowing internal charge rates and rental trends are crucial in being able to accurately create a project bid. While the difference between a rental rate and internal charge rates could be just a few dollars, it could be the difference in winning or losing a bid.
Making the decision to rent equipment or use an owned asset is always a difficult one, and this decision can be influenced by many different factors like expected time on job and expected use hours. Understanding the rental market as well as internal charge rates is incredibly important. However, knowing general patterns between average rental costs compared to average ownership costs for different types of equipment can be a huge help in making that decision. After analyzing 83 different subtypes on monthly, weekly, and daily levels, the top 5 subtypes with the smallest variance between average retail rental rates (using EquipmentWatch Rental Rates) and average ownership costs (using EquipmentWatch Costs) quickly became clear.
Looking at the graph above it’s easy to see just how little rental rates and ownership costs vary. Crawler mounted chain trenchers have the smallest variance with monthly ownership costs being just 0.7% less than monthly rental rates. Not far behind are general purpose portable belt conveyors with monthly ownership costs averaging 0.9% less than monthly retail rental rates. Single engine pavement sweepers have a slightly higher variance with monthly ownership costs 1.7% lower than monthly rental rates. Non-articulated wheel loaders are the only subtype in the top 5 where rental rates are lower than ownership costs per month with a 2.0% variance. Lastly, road wideners have the highest variance out of the top 5 with the average monthly ownership cost being 4.8% lower than monthly rental rates.
Again, we see very little difference between rental rates and ownership costs. Self propelled pad food compactors lead the way with weekly ownership costs being only 0.3% less than weekly rental rates. Rental rates for standard crawler dozers are 1.4% less than weekly ownership costs. Crawler mounted hydraulic excavators also have a lower weekly rental rate which is 2.1% less than weekly ownership costs. Crawler mounted asphalt pavers and skid steer loaders both have weekly ownership costs that are 2.5% less than weekly rental rates on average.
As expected, we see a bit more variability when comparing daily rental rates and ownership rates, however, they can still only differ by just a few dollars. Wheel mounted hydraulic excavators cost 2.0% more to own than rent per day. Similar to what we saw when analyzing monthly variances, general purpose portable belt conveyors cost 3.7% less to own per day than to rent. Wheel mounted grapple log skidders have a 6.7% variance with ownership costs being higher than rental rates per day. Trench compactors also have higher ownership costs per day with a 7.6% variance. Out of the top 5, air track drills have the largest variance with ownership costs being 8.8% less than daily rental rates.