To lease or to purchase, that is the question
Posted on: 16th May 2019 by: Alex Smith
If you’re looking to secure some new edtech for your school – or if your current lease on ICT equipment is due to expire, it is worth considering your options when it comes to leasing or purchasing. Alex Smith from St. John Vianney Catholic Primary School weighs up the pros and cons of both…
When deciding whether to lease or purchase new equipment, considerations must be made; how long does the school intend on using the equipment? What does the school do with old equipment? Will it have any residual value at the end of its useful life? And of course, which is the cheapest?
Forever decreasing budgets make leasing seem an ideal option to save money – but are they just a short-term solution to a long-term issue?
Here’s an example: resellers offer tablets on a 3-year lease (including extended warranties/ insurance, rugged cases and MDM subscription) for an annual charge per device, per year. Sometimes they’ll even throw in a charging trolley for a class set.
Sounds great, but what happens after the three years? Most companies allow you to pay the ‘current’ value of the devices at the end of the term to keep them, or you can return them. Many schools I have visited that lease tablets have used Pupil Premium funding to provide a 1:1 scheme for their devices.
Leasing makes access to the latest technology more viable, with the education sector becoming increasingly less affluent – particularly for bigger projects in smaller schools. Leased devices tend to be provided with extended warranties/ insurance throughout the contract period covering device faults – not all providers cover accidental damage.
So, am I better looking to purchase equipment outright?
Using the previous example: through education pricing, you can buy the same tablet outright for a similar price (3x annual device charge). The extended warranties/ insurance, rugged cases and MDM would need to be purchased separately, and when purchasing a class set, you’d also need to buy a charging trolley.
This option would only be open to more affluent schools who can afford to pay out lump sums but also means you own the devices which can be used until school decides otherwise. Most schools who purchase tablets use them for at least five years before looking to upgrade, at which point it’s only due to OS limitations and app compatibility restrictions that they’re forced to. The only thing you’d have to keep paying is the MDM fee.
When a school decides a device refresh is required, the devices can be checked for residual value to sell on or to trade-in giving the potential to reclaim some money. Of course, a refresh would mean another lump sum to purchase the new equipment again.
Dependent on device manufacturers and resellers, most devices now come with warranties ranging from 3 – 7 years for little or no extra cost leading longer lifespans; sometimes more than double the average 3-year lease period constituting to cost savings over time.
Ultimately, the decision will depend on your school’s approach to procurement, and IT refresh strategy – many prefer smaller annuals costs to have the latest devices without a lump sum, whereas others prefer a lump sum to purchase the devices and use them beyond their recommended end of life date; who hasn’t been in a school that’s still using a 15-year-old Smartboard?!
Extended warranties and longer lifespans can make purchasing equipment a better financial decision in the long-term, but how long do you realistically want to use a device before it becomes outdated? Likewise, leasing has become an increasingly popular solution to access the latest technology, but can the school guarantee consistent and reliable funding to support the ongoing costs?
Both options have their place, and both should be considered for larger projects – either can work out cheaper depending on the reseller and finance company.
Always remember to check the small print as some companies will use third-party underwriters for the finance which may charge a fee for each lease agreement. They may also add a fee and/or interest onto any final payments and could fine you if the device has been returned damaged/ marked. It’s also worth noting that most companies will offer shorter or longer lease terms dependent on the school’s requirements, but on average the cost of leasing vs purchasing breaks even around the 3-year mark. With the extra costs and fees, leasing can work out more expensive in the long-term.
Alex Smith BSc (Hons), MBCS
ANME Member & IT Manager, St John Vianney Catholic Primary School
Written for Education Executive