Renting vs. Buying a Cryotherapy Machine
Acquiring cryotherapy equipment is often at the top of the checklist for opening a new business. Then comes a major dilemma: should you buy a cryotherapy machine or lease one over a period of time?
The XR is the nation’s #1 cryosauna, built entirely in California.
Both modes of acquisition could work, but which one should you go with? Here’s a quick overview of buying and renting out a cryotherapy machine.
Pros of Renting Cryotherapy Equipment
Keeps up With Technology Changes
As technology advances in the health and wellness industry, old models of cryotherapy machines are becoming obsolete. There are newer and more effective ways to perform the service with better models of the machines.
Renting a cryotherapy machine for a short duration of time means that you can adapt to the technological changes by renting the new models. You can easily upgrade your machines every few months, differentiating you from your competitors.
Low Periodic Payments
Buying a new cryotherapy machine requires a significant capital outlay. This is difficult to manage, especially for first-time investors in the industry.
Renting the machine, however, provides a cheap and sustainable alternative for new businesses that do not have enough cash flow to purchase the machine.
No Commitment to Keep the Machines
There is no commitment to keep the cryotherapy machines past the expiry of the rent periods. New businesses without a clear business vision can rent the equipment, try it out, and return them if the cryo business model does not work.
Pros of Buying the Cryotherapy Machine
Lower Cost in the Long-Run
The initial cost outlay of buying a cryotherapy machine is high, but there are no subsequent charges. Leasing or renting the machine requires periodic payments that will over time accumulate to more than its purchase price.
Ownership of the Equipment
Buying the machine transfers all the ownership rights to you. You are free to use it without any third party's control. This also guarantees that you get all the machine's profits since you don't have to pay any rental or leasing fees.
Tax Advantages
Favorable tax laws such as Section 179 deduction¹ give a tax advantage to those that purchase cryotherapy equipment over those that lease or rent the machines.
These advantages make purchasing the equipment even more economical in the long-run.
Should You Buy or Rent a Cryotherapy Machine?
Getting a cryotherapy machine for your business can be financed in various ways, including buying, leasing, and renting the equipment. Buying a new cryotherapy machine is the most capital intensive of the three, but it also gives the buyer the most control over the machine.
On the other hand, renting the machine requires the least capital outlay to start with but gives the renter the least control.
It is generally recommended that you should buy the equipment only if you use it to generate 60%-70% of your business.² You should then rent the equipment if you are generating less than 60% of the business revenue from cryotherapy.
Founded on facts: for peer-reviewed articles, scholarly journals, and articles cited above please see the below sources.
IRS issues guidance on Section 179 expenses and Section 168(g) depreciation under Tax Cuts and Jobs Act - https://www.irs.gov/newsroom/irs-issues-guidance-on-section-179-expenses-and-section-168g-depreciation-under-tax-cuts-and-jobs-act
15 ADVANTAGES TO RENTING EQUIPMENT VERSUS OWNING IT- https://www.holtca.com/company/news/renting-equipment-versus-owning
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