eLease Equipment Leasing

Sometimes examples help illustrate abstract concepts like leasing. We are working with a film production company that has about 4 years in business and is trying to expand. The economics of their business provides a clear example of how leasing can help any business grow.

In the video production industry equipment doesn’t come cheap. Professional cameras range from tens of thousand of dollars to hundreds of thousands of dollars and with each piece of equipment there are necessary accessories which always end up costing thousands of dollars. And that is just the beginning. You need professional monitors, decks, expensive editing software and lighting packages.

This particular client has several projects happening at the same time and they wanted to increase their productivity by expanding their editing capabilities. They didn’t have enough capital to purchase the editing equipment required and were at a standstill.

When I ran the numbers for the client it made their decision easy. The equipment cost about 10,000 and it would take them months, if not years, to have enough money to purchase the equipment with revenues from the business. Their clients usually pay 60 days after the work is completed and they had a limited amount of work they could do given their existing infrastructure.

These clients bill their customers about $750 a day for editing and were not able to bill more because they only had one editing system to work on. You can lease $10,000 of equipment for as low as 225 dollars a month, far less than one day of editing. The numbers made their decision easy. By leasing the editing equipment they can spend less than half a day a month paying for their system and the rest of the month is profit to the company. The question for the business owner was clear: will you have use for the editing system for more than one day a month moving forward. The answer was naturally yes and leasing the editing system allowed them to remove a bottleneck of their production line and expand their business exponentially.