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Purchase Price ÷ Number of Gigs, or Cost of Ownership v. Rental Dual-Channel Preamps
Old 24th November 2010
  #1
Lightbulb Purchase Price ÷ Number of Gigs, or Cost of Ownership v. Rental

I tend to scoff whenever forum members answer posters with the response, "Why don't you just rent gear?", as if it were easy and affordable for all situations. I wonder if they realize that renting equipment would sometimes exceed the amount posters are paid. I wonder if they realize many posters live in areas where renting or trialing gear isn't possible. I can rent an my area, but it costs $50-$100 just to rent an SM57 and $150 to rent run-of-the-mill wireless mics. Selection is limited, and the rental houses are piss-poor at responding to inquiries. So... I own all the gear I use, and all the other area engineers I know do too.

But then I got thinking... Sometimes I say to myself, "Gee, I'm so glad I have this useful tool that I use all the time. For the amount that I've used it, it's like paying pennies per gig. What a great investment." But then you know there are a few things in your mic locker that you don't use that much. Something in your rack that you seemed like a good idea but never really panned out. How much are those per gig?!

So, let's do the math! (Where is the nerd emoticon?)

1. Pick a piece of gear.
2. Divide the purchase price by the number of gigs you've used it on.
3. Post!

I'm not particularly concerned about whether you've made much money using the gear. I'm just curious about the cost of ownership v. the cost of renting. Clearly there will be a difference between folks who do 200 gigs a year and those who do 20, as well as those who have been recording for 2 years and those who have been recording for 20. I think spending some time mulling this over will be interesting.
Old 24th November 2010
  #2
Let's see...

Orban 642b EQ - I bought this for $375 for the purpose of setting up an OTB 2-bus while mixing. Only I got so busy, I needed to mix everywhere. I must have used it about five times, which puts it at $75 a gig.

Nady SP5 - I bought several of these when I first got interested in live sound. About $7 a pop. Most of them were stolen (thank goodness they weren't 58s), but I've still go one left. I'm guessing it's cost about twenty cents per use? Hard to say for sure. You've gotta run 500 gigs with a 58 to get the same value!
Old 24th November 2010
  #3
Lives for gear
 
mosrite's Avatar
 

Well I think everyone's situation is different. I make / made my buying decisions on a number of factors including how difficult or expensive a particular piece of gear is for hiring.

The Nagra VI costs a lot of moolah to buy and I know I don't need it for every gig. I also know that the gigs I need it for pay more and usually factor in expenses. So I decided not to buy this and to hire it instead.

The Neve 1073DPD that I own is not an easy item to hire, it also serves a number of purposes for me and I use it a lot for this reason. I decided to buy it.

These are just 2 examples but neither of which required me to do any math (which is a good thing!)
Old 24th November 2010
  #4
We rent a fair amount of gear and there is a formula to rental prices per day, which is also useful when considering whether to buy.
The normal rental rate for items that are relatively durable is 3 to 3.5% of the retail purchase price per day. Using this formula, if you need it more than 30 days in a period of time (Year, 2 years....depending on the gear) it makes sense to buy it.
Now, if you live in a major market, it's easy to rent without incurring shipping charges, but if you live in the boonies, you need to consider shipping charges as well, which in many cases makes owning much more attractive.

All the best,
-mark
Old 24th November 2010
  #5
Lives for gear
 

Who is getting $50/day for an SM57?

I rent when I need to, even if it means the gear has to come from another city. If the client wants that gear or needs what it does bad enough they pay for it. I buy stuff that seems like it will get used and make my work easier better and more enjoyable, within limits of how much it will really get used and paid for. Some things are just kind of the "ante" you have to put up to play in a certain game (often things that are expensive). Clients are more readily willing to pay for gear that they "touch" somehow--in video audio the small wireless receivers made by Comtek, for instance.

phil p
Old 24th November 2010
  #6
Super Moderator
 
Remoteness's Avatar
He said, $50 to $100 to rent a SM57.
We charge $10.00 USD for that same mic type.
Old 24th November 2010
  #7
Gear Guru
 
John Willett's Avatar
 

Purchase Price ÷ Number of Gigs, or Cost of Ownership v. Rental

Quote:
Originally Posted by Remoteness
He said, $50 to $100 to rent a SM57.
We charge $10.00 USD for that same mic type.
That sounds more reasonable.

Though I always understood that the rule of thumb for hiring was 5% a day, 10% a week.

Sent from my iPhone using Gearslutz
Old 24th November 2010
  #8
Unhappy

The rule in DC and VA is the same as many posters have recommended in the past: charge as much as you can get.

The market is geared towards corporate work, which results in high rates on simple items like powered speakers, projectors, microphones, and two-track recorders. It also means there don't seem to be any items useful for high-end remote recording projects.
Old 24th November 2010
  #9
I don't know these guys personally, but their rates seem pretty competitive:

RCI Sound Systems | Rental Equipment

Granted, they're on the north side of the Beltway, but I can't imagine that they are the only game in town either.

As to the original topic, it is definitely a good idea to calculate how much it is costing you to rent a piece of gear as opposed to owning it.

Some years ago, before I owned my AD16, I had to rent one 5 times in four months, at a cost of $100 a pop. At that point, I made the rental house an offer to buy it and they gave me a (really) good deal. If I would have continued renting it, I could have bought several brand new ones by now with the money I had to shell out.

As for mic's, on one end of the spectrum, the number of times I actually use my U87 probably would not justify the cost, though I have used it enough to say I have saved money by not having to rent it, but it is not a regular fixture on most of my gigs. I bought it used, it sounds great, and it does something that no other mic I own can do, so that justifies it for me.

On the other hand, the return on investment on my Schoeps CMC64's is ridiculous. I'd venture to say that these mic's have not only paid for themselves, but they also paid for the majority of my rig, and have appreciated in value to boot.

This is how I figure my calculation:
1 - How much money did/will this piece of gear make you?
How many gigs did it enable you to do successfully that you could/might NOT have done without it? How much business does this piece of gear bring in? Will you make more money with it than without it?

2 - What is the residual value?
If I sell my U87 now, I will probably get more than what I bought it for - that's a good investment, regardless of how often it gets used; so the money I make using it is just gravy. This is true of the majority of the kit I have bought.

3 - Over time, how often will you need this kit to get the job done?
Is this a once-in-a-blue-moon need or will you make more over time by NOT renting it? If you are filling the same riders over and over, owning will beat renting over the long haul. Rental is an expense that you will either have to pass on to the client (which raises your rate - this "hidden cost" can annoy some potential clients and cause them to look elsewhere), or you have to eat the cost (which eats into your profit margin).
Old 24th November 2010
  #10
Gear Maniac
 

I guess part of the equation has to include convenience and familiarity. Time is money.
Old 25th November 2010
  #11
LX3
Lives for gear
 
LX3's Avatar
 

I have never been able to correlate the amount I've spent on gear with the (quite low) amount I have to charge for gigs. If someone wanted to rent all the gear I use on a show, it would cost them twice what I charge, and they'd still have to set it all up and operate it themselves. If I can't get even half what a rental company would get, AND I have to deliver it and work a full day on the show... it's not a great sign.

But hasn't the audio/studio industry always been a bit that way? It's kind of an enthusiasts money pit.

Anyone doing a viability analysis of this industry would probably run a mile. But somehow it's worked out for me by very slowly building up from my first rig about eight years ago. There are a few small bits I occasionally have to rent - an extra multicore for instance, usually when we're doing two shows on the same day - but renting causes so much extra hassle in collection and delivery that it's a last resort for me, so I'd always rather own something I'm likely to use repeatedly. And the truth is, if I ever need to rent something bigger, my fee has to increase so much to cover the rental that most clients these days will think again. Budgets are pared right down to the bone now.

But hey, it could be a lot worse. I'm doing some worthwhile gigs from an artistic point of view, making clients happy, and getting by financially at the same time. And I love the job. It's ok.

Everyone please buy more music and put some cash back into the industry...
Old 25th November 2010
  #12
LX3
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Ooh, I just read this again. Quite topical for me at the moment:

Quote:
Originally Posted by RobAnderson View Post
1 - How much money did/will this piece of gear make you?
How many gigs did it enable you to do successfully that you could/might NOT have done without it? How much business does this piece of gear bring in? Will you make more money with it than without it?
That's the million dollar question. I find that I have to test the water, put my money where my mouth is, jump in with both feet, see if anyone salutes it... (add your cliche here).

What I mean is, without most of the right gear, I'm unlikely to get booked by anyone that needs that gear. And until anyone approaches me with the kind of job that requires that gear, it's difficult to judge how much my rate can increase. So I tend to take a gamble, buy the kit when I can afford to, and generally keep pushing things forward. There will probably come a point where the returns from upgrading or expanding my rig stop coming, and I sense it's close already. But I have a couple more big leaps I want to make.

Unfortunately, as you go on, the leaps get larger and larger. As a simple example, your £200 mic gets upgraded to a £400 mic. But the mic you'd ideally replace that one with is £1000... Expand that trend across all the mics/preamps/mixing desks/recorders you use, and the later upgrades start to cost enormous sums of money. So as Rob points out, by continually upgrading there may well come a point where the upgrade cost can't be justified by the increase in your fee.

Especially when pressure on client budgets seems to be going the opposite direction...
Old 25th November 2010
  #13
Lives for gear
 
hbphotoav's Avatar
 

Since audio recording is the third (or fourth) egg in my particular basket of Profitable Endeavour, my take is likely somewhat different than someone whose sole income is location recording. That said...

From nearly Day One in each (photo, beginning in the early '70s; video production, in the early '90s; live AV support, mid-'90s; and audio recording beginning in the mid-'70s with a Teac A3340s and a pair of Sony C55FETs... resumed in the late '90s) I determined to own what gear I needed to produce work my clients would pay me for. I was fortunate in high school in the '60s to have received a Nikkormat FtN as a gift (which 50mm f:1.4 prime lens is still in service 42 years later) and discovered I could sell photos and buy more stuff. Shortly after that revelation (and being disappointed in the performance of the first cheap off-brand lens I bought) I decided to purchase only first-line stuff. For the most part, I've maintained that perspective.

After renting a small (big, then) Peavey PA system to assist my roommate (a local disc jockey) at his Friday night dance gigs (mid-70s), and seeing half the money I was paid go to the owner of the gear, and not having the gear between gigs to do fun stuff and church stuff with... I bought a very used (but completely functional) bi-amped Altec Voice of the Theater system and started doing DJ gigs... which paid the note after the 3rd 90-day turn. And on it went. Photos was my primary business for 30 years... but by reinvesting nearly every bit of gain from DJ and recording gigs, I built a nice collection of working gear that, when opportunities presented themselves, I could do free, or charge for, as I decided I needed, without worrying about recouping rental charges or, particularly, if the gear would work as advertised.

Nowadays I only rent massive projection (10Ks) and screens (larger than my 9x12s) for clients who demand them and who pay a marked-up rentals fee over my "normal and usual" rates for the smaller gear.

Recent case-in-point... I needed to provide six large-screen LCDs for a multi-room AV job. I own a pair of Samsung 37"... rental of four 40" LCDs from the local rental house was $250 per screen, retail (what I would charge my client... remember: that fee includes not only the screens but the transport, casing, cabling, video DAs, carts and drapes... which I already own for projectors). I would retain about 35% of that, after my discount. Since I had $1,000 coming in from the rentals, and since I had booked one additional job after the first of the year for six screens (another $1,000), it made sense to drop $1,600 on four new 40" RCAs and $200 on a used case for them. Net: I carry $800 in "cost" for a couple of months after the first gig; the system cashflows after the second gig; and becomes a "pure" profit proposition for every gig after that. And, of course, since they are paid for, I can also decide for church or local 501c3s or whatever, that I don't need to charge anything at all when that's appropriate.

Same goes with my better recording mics... I once traded three full days of location photography to a local studio owner (about $3,000 in value) for two Gefell M296s and two Gefell M270s he rarely used in his studio. I rarely used them myself until they helped solidify a gig with a client who has taken me to Europe for the past 10 years running to produce the souvenir video for his music festival. The 296s have become my main omni pair. I'd rather own them than rent them.

Figure out how to afford the tools you need to secure and maintain client base. Use the hell out of what you have, well, satisfying clients until you can afford what you want.

One man's perspective.

HB
Old 26th November 2010
  #14
Lives for gear
 

most gear has some sort of resale value so when you take that into consideration it means renting is more expensive.. Also when you own something you become more experienced at using it and you arent at the mercy of availability at a rental place.. Also owning the gear opens channels up that renting restricts.. For example you could volunteer at a benefit gig and then meet someone who needs something else and earn good money off the second gig, that scenario doesnt exist so easily if you are renting..

I still have to rent at times but I dont like it, id much rather own everything i need but i have a rule though that im trying to stick to which is... buy stuff when the gear makes money and also when i have a small buffer in cash flow to afford it, that way if something breaks down a week later i havent just blown all my dosh on a new bit of gear and been left high n dry..
Old 29th November 2010
  #15
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pkautzsch's Avatar
 

Quote:
Originally Posted by ebulb View Post
most gear has some sort of resale value so when you take that into consideration it means renting is more expensive..
Some gear's resale value may even be multiples of what it cost new. Think "Vintage" gear.

Quote:
buy stuff when the gear makes money and also when i have a small buffer in cash flow to afford it, that way if something breaks down a week later i havent just blown all my dosh on a new bit of gear and been left high n dry..
That's a solid approach.
Old 29th November 2010
  #16
Lives for gear
 

Quote:
Originally Posted by ebulb View Post
most gear has some sort of resale value so when you take that into consideration it means renting is more expensive.
It seems those other folks, for some unknown reason, did not take
resale value into consideration.
Old 30th November 2010
  #17
LX3
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Quote:
Originally Posted by Brackish View Post
It seems those other folks, for some unknown reason, did not take
resale value into consideration.
Who ever sells any of their gear? (I don't seem to, I just end up with more of it).
Old 30th November 2010
  #18
Quote:
Norsehorse states:
I wonder if they realize that renting equipment would sometimes exceed the amount posters are paid.
Come to think of it, if your rental charges are more than your pay, something is wrong with your rates.

Otherwise, people get what they pay for.

Quote:
ebulb writes:
most gear has some sort of resale value so when you take that into consideration it means renting is more expensive..
This is true, but you do have to take into consideration an equation not unlike what Norsehorse put in his first post, essentially: how many times am I going to use this thing? and is it worth the opportunity cost of buying it?

There may be better uses for the amount of cash that you need to shell out, considering the overall usefulness of the device in question. You can write off the expense of renting the gear or pass it on to the customer, so renting is not always a bad way to go compared to owning. Also, as an owner you will incur the expense of maintenance and/or repairs (a very real expense if you are doing on-location work especially) as well as the cost of insuring the gear, so owning is not always cheaper than renting.

However, if it is a device that is hard to rent (either local rental houses don't have it, it is not always easily available, or if the quality of the rented gear is in question), then owning definitely makes more sense.
Old 30th November 2010
  #19
Lightbulb

If you ask around, there are numerous full-time professionals and part-time hobbyists who earn ~5% or less relative to the amount of gear they bring to a show. Maybe you even have some gigs that fall into this category. It can often sneak by unnoticed.

Remember this thread?: https://www.gearslutz.com/board/remot...h-session.html

Pay was $375. That 5% of just $7,500. Very easy to exceed, especially when you are passionate about the gear you use and the sound you want. Have you ever kept track of this? I did. I kept a "gig sheet" for every job which detailed the gear used (including the $ value of the gear) and the time spent on the project, plus other relevant details (fees, expenses, etc). Using this chart, I could generate many different metrics including, but not limited to, the ratio of gear v. fee. For what it's worth, I generally do not use the "value" of the gear I bring to a show to determine my fee anymore, though the "amount" of gear I bring to a show can be a strong factor. (e.g. Adding a PA. Adding monitors. Adding videocameras. Adding people.)

This isn't limited to the audio world. I prefer to hire videographers instead of videocameras. If you know people, you can get cameras + cameramen for the same amount it costs to rent just the cameras. (PS. Thanks for the link to RCI! I wasn't aware of them.)

With regards to resale value, I do have that in the back of my mind, but I don't want to rely on it to justify purchases. For me, the justification should come from a) the amount of use I can get out of it and b) the amount of work I can generate from it (if any). And a very big C) how it sounds and D) how it effects my workflow. If something can save me time, it can easily "pay" for itself.
Old 1st December 2010
  #20
Quote:
Originally Posted by NorseHorse View Post
For what it's worth, I generally do not use the "value" of the gear I bring to a show to determine my fee anymore, though the "amount" of gear I bring to a show can be a strong factor.
Totally agreed - another thing I factor in is prep time. A "big" multi-track gig represents a lot more labor and prep time on my part than a small live-to-2-track gig, and I have learned to charge accordingly.

But if it requires a rental, eating the cost is not an option for me. I think I'd have to go with another piece of gear that will get the job done acceptably, or pass the cost along.

Quote:
With regards to resale value, I do have that in the back of my mind, but I don't want to rely on it to justify purchases. For me, the justification should come from a) the amount of use I can get out of it and b) the amount of work I can generate from it (if any). And a very big C) how it sounds and D) how it effects my workflow. If something can save me time, it can easily "pay" for itself.
thumbsup
Resale value won't justify the purchase, but it is a big consideration for me. I'll often buy used or B-Stock gear because I know I'll be able to recoup my investment if I ever decide to sell out. This way, any money I make using this gear is pure profit (unless I have to do repairs, etc.).

Caveat emptor though...
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