Buy or rent bulk bins? The calculation we run with our customers

Every summer we get the same call: "I need bulk bins for the season, would it work out better to buy or rent them?". The honest answer is that it depends on four or five figures that you have and we do not, and that almost no one sits down to put on a spreadsheet. Once you do, the decision usually falls into place on its own.

Here is the method we use with our customers: which variables to include, which ones always get forgotten, and how to interpret the result. No strange formulas. With a spreadsheet and ten minutes you have it.

Two preliminary questions that sometimes save you the calculation

Before you add anything up, answer this. If the answer is clear, you no longer need the spreadsheet.

• Are you going to use the bulk bins for more than one season a year, or all year round? If the container rotates continuously, warehouse, industry, cutting line, buying wins almost every time. Rental is designed for peaks.

• Do you have somewhere to store them for eleven months? An empty 1200 × 1000 × 780 mm Big Box takes up the space it takes up. If you have to rent a warehouse to store them, that cost counts against buying and usually decides the matter.

How to calculate the cost per bulk bin and per season

Always compare the same thing: what it costs you to have a bulk bin available for a season. These are the variables.

For buying:

• Your purchase price per unit (new or inspected second-hand).

• The years of service life you expect to get from it. HDPE can withstand many seasons if you do not mistreat it, but use a conservative figure based on how you handle it.

• Seasons per year in which you use it.

• Off-season storage cost: square metres taken up, by their price.

• Losses and replacement: what percentage of your stock disappears or breaks each year.

• Repairs: legs and skids are consumables, and they get replaced (see accessories).

• Residual value: what you get for them when you retire them. We buy used bulk bins, so that figure is not zero.

For renting:

• Rate per bulk bin and per rental period.

• Outbound and return delivery costs, if not included.

• Actual days you have them, including the safety margin before and after the peak.

• Charges for units not returned or damaged.

And then the sum: annual cost of buying = (purchase price − residual value) ÷ years + storage + losses + repairs. Compare it against a season's rental invoice. Divide both by the number of bulk bins and you are comparing like with like.

An indicative example

The figures that follow are made up to illustrate the method, they are not our rates. Replace them with your own.

Imagine a bulk bin you buy for 100 (arbitrary unit), you estimate 8 years of life and a residual value of 20 at the end. Depreciation comes to 10 a year. Add 2 for storage, 3 for losses and 1 for repairs, and you get 16 per bulk bin per year. If a season's rental costs you less than 16, renting wins; if it costs more, buying wins. And if you use the bulk bin for two seasons a year, that 16 is split between the two and buying pulls even further ahead of the competition.

One thing to watch: residual value and service life are the two variables that move the result the most, and the two that are most often estimated by eye. If in doubt, calculate with the pessimistic scenario. If buying still pays off even then, the decision is made.

What almost no one includes in the sum

• The financial cost. Buying 500 bulk bins ties up cash right before the season, which is the worst time for it. Rental turns that investment into a running cost and leaves your working capital free.

• Volume flexibility. If your production varies a lot from one year to the next, buying for the good year means having a lot of container sitting idle in the weak year. A very sound formula is to buy the base you always use and rent the peak.

• Availability. Rental has to be booked; in the middle of the season, stock calls the shots. If you are going to rent, do not leave it until the last minute.

Tax treatment: investment versus expense

In general terms, buying is a fixed asset that is depreciated over several financial years, while renting is a deductible expense in the year it is paid. This changes when the money is deducted for tax purposes, not how much the bulk bin costs you. It is a cash-flow argument, not a real-cost one, and it is worth checking with your accountant: every business structure and every financial year is different.

Summary: when each option applies

• Buy if you use the bulk bins for more than one season a year, have somewhere to store them and your volume is stable.

• Rent if your use is purely seasonal, you have no spare warehouse space, or you want to cover a one-off peak without tying up cash.

• Mixed if your volume fluctuates: your own stock for the production floor and rental for anything above it.

• Buy second-hand if you want buying's cost per use without the upfront outlay of new containers.

If you send us your figures, bulk bins needed, weeks in season, whether you have a warehouse, we will send back both options costed so you can compare for yourself. You can request a quote or call us and we will go through it in five minutes.