OTC Insights Team
Established in 1963, OTC Industrial Technologies is one of the largest industrial distributors & service providers in the United States. We're committed to seeing industrial operations advance through expert technical solutions & unmatched support using our years of experience.
There’s pressure on manufacturers: Businesses, including those in manufacturing, are wrestling to mitigate damages from the supply chain crisis. Customers are pushing manufacturers across verticals to ramp up production and deliver higher quality products in less time. Customization in production is on the rise, and available workers are decreasing.
As business and production leaders assess their options in meeting these challenges, one question continues to rise. Do you rent or own your own equipment? Is an investment in purchase worthwhile, or is more to be gained by renting?
Optimize Your Decision: Rental or Purchase of Air Compressor Units
When it comes to renting or buying an air compressor, there are many factors to consider.
Often price is the primary factor in the decision to purchase and own an air compressor, or whether a rental until will meet needs and reduce costs and support for the unit. A capital purchase like an air compressor is an investment, and it requires an investment not only in capital, but also maintenance and human resources. However, there are other things to consider in the decision.
In this article, we’ll look at those factors and evaluate the pros and cons of renting versus buying an air compressor and what OTC can do to help you with your equipment needs.
Evaluating Your Air Compressor Options
There are a few questions you should ask before formulating your strategy for an air compressor. Make sure the evaluation includes the stakeholders in the decision, such as the management team, sales, production leaders, and the employees that will be using the compressor regularly.
What Are Your Air Compressor Needs?
Every manufacturing and production process is different. If you only need an air compressor for a single job or order, then a rental provides you with a cost-effective way of meeting that need. The cost of the rental air compressor can be included in the estimate for the order, and the delivery and setup for the rental can be incorporated in the schedule.
But single-use rental units are not the most efficient use when you will need compressed air for multiple jobs now and in the future. Over time, the cost of regular use of a rental unit will exceed the capital investment of purchase and ownership of an air compressor. There are potential risks with rental, such as additional repair or maintenance costs. If there is a potential for more work with the air compressor, then you should factor in those potential expenses.
Business Scaling and Availability
Supply chain trouble is impacting not only your business, but your suppliers’ as well. You should take time to evaluate the availability and backlog for rental air supply units in your area. Ask about the turnaround time for delivery, and factor that into the delivery of an order requiring an air compressor for your customers.
Also consult your sales team regarding future business goals. Not having easy access to compressed air can limit the jobs you can take and orders you can fill for customers. Adding an air compressor, even a smaller unit, will provide more customer service offerings or jobs that require compressed air. In these cases, there are long-term benefits to purchasing, rather than renting, an air compressor.
That said, if there is no specific future need for an air compressor unit, then a rental unit may be all that you need. It will provide additional capacity, capability, and revenue without the need for long-term investment.
Price and the Total Cost of Ownership
As with any business investment, it is important to evaluate the Return on Investment (ROI) and Total Cost of Ownership (TCO). The TCO is the sum of the purchase price and operating costs over the life of the air compressor unit. If the return in revenue is more than the TCO, then the investment is worthwhile. If the potential ROI is less than the TCO, then rental units should meet your needs.
Keep in mind that a rental will cost much less than purchasing a compressed air system. Over time, the cost savings will diminish with additional rentals. Maintenance and upkeep of the system should also be considered. For long-term rentals, consider where and how the rental costs are applied.
Compressed Air with OTC
As with any capital investment, it is important to balance the risk and the reward. At OTC, we can provide not only rental units when you need them, but the insight and expertise you need as you evaluate your options. We also provide support, installation, and after-sale services when you’re ready to buy an air compressor.
Contact us today to learn more about our compressed air products and services.
