Electro Rent

For decades, companies have leveraged rental to reduce costs and manage cash flows, from car fleets to real estate and large equipment. However, the benefits of renting other assets, such as test equipment, have yet to be fully exploited. With total spending on test and measurement equipment set to reach $61.5bn by 2034*, it’s not surprising that rental adoption is accelerating dramatically with a projected 4.82 percent compound annual growth rate (CAGR)*. And yet, purchasing this equipment outright is still the default choice for many businesses, so the untapped potential is enormous.

Electro Rent offers a transformative approach that strategically mixes rental, buying new and used, leasing, financing solutions and asset management to reduce costs, enhance project flexibility, and improve utilization. This unique approach allows companies to invest more in new testing technologies. By paying for the use of the equipment rather than for life, they avoid tying up valuable capital in underutilized assets.

From aerospace and defense to semiconductor manufacturing and telecommunications, the need for cuttingedge test equipment is paramount in many industries. These sectors rely on precise instruments to validate products, ensure compliance with standards, and drive innovation. However, assets are often purchased based on project needs and then lie unused while they continue to incur costs through depreciation, financing, and ownership expenses. Analysis of data from Electro Rent’s asset optimization solution, which distils the organizations knowledge and experience managing their own test asset pool into a software application, shows utilization of 50 percent or less is not uncommon for high-value test equipment. With annual spending on test equipment in the millions of $USD for many companies, this can have a substantial impact on balance sheets and cash flows.

Electro Rent’s combined procurement solutions allow businesses to affordably invest in the latest testing technologies while sidestepping the risk that equipment could quickly lose value or sit idle. The company invests continuously in its $1+ billion inventory (valued at list price) to ensure its clients have access to the latest equipment while aligning spending with operational needs. This provides substantial financial benefits by shifting expenses away from up-front capital expenditure while ensuring companies only pay for the equipment they use.

“In today’s economic environment, companies need a variety of test equipment acquisition options” says Michael Clark, CEO of Electro Rent. “To reduce overall project costs while increasing flexibility, minimizing risk and long-term commitments, renting is ideal. It also protects against technology obsolescence, and allows users to pay for the use of the equipment versus the life of the equipment.

For environments where equipment is expected to be deployed on multiple future projects and utilized consistently for several years, purchasing may make best sense, but when funding is tight, discounted certified preowned equipment may be the best option. Test equipment users can also improve operational efficiency across their entire test fleets with asset optimization solutions. We are uniquely positioned as the global single-source leader that offers all of these acquisition options and solutions.”
In the face of prevailing economic uncertainties, Electro Rent's solutions provide flexibility to weather-changing market conditions, allowing companies to adapt quickly to evolving project parameters. Opting for renting over ownership minimizes exposure to interest rate volatilities and inflationary pressures, improving financial resilience.

Many Electro Rent customers benefit from their Rent versus Buy analyses which compare the Net Present Value (NPV) Michael Clark, CEO Efficient Testing, Smart Spending: Rethinking the Ownership-first Model cost of acquisition for rental and purchase. This method considers taxation, depreciation and use of the assets, the organization’s WACC (Weighted Average Cost of Capital) and ownership costs to help them evaluate when to rent.

The following example illustrates this approach. An aerospace and defense company needs several high-end instruments with a total purchase cost of $1m for a two-year project. Assuming typical circumstances for a large organization, the NPV cost of rental over the two-year period would be $419,496 compared to the NPV purchase cost of $966,6221.

With a net saving of $547,127, rental makes better financial sense to many organizations. The decision to rent or buy ultimately comes down to the individual situation of each organization, and this is where Electro Rent is uniquely positioned to offer advice.

Electro Rent is reshaping how industries procure equipment, providing a one-source solution that promotes efficient practices in high-tech test procurement. In a climate where industries face mounting pressures to streamline costs and enhance efficiency, Electro Rent remains a trusted partner by delivering innovative financing solutions that prioritize financial prudence and operational excellence.

* Source:
1. Future Market Insights, Test and Measurement Equipment Market Outlook from 2024 to 2034, May 2024.
https://www.futuremarketinsights.com/reports/test-and-measurement-equipment-market
2. Market Research Future, 2024, Renting & Leasing Test and Measurement Equipment Market Research Report.
https://www.marketresearchfuture.com/reports/renting-leasing-testmeasurement-equipment-market-10469