Buy or Lease? How Top Service Companies Save $11,250+ on Equipment in 2025

Buying equipment or leasing, that’s the ultimate dilemma faced by many business owners.

Leasing definitely looks cheaper initially. You get lower upfront costs and flexible payments. But those “affordable” monthly payments add up over 2-5 years, steadily eating away at your profits.

Buying isn’t necessarily the perfect solution either. While you might save money long-term, you face serious upfront costs plus ongoing expenses like maintenance and depreciation that can make or break your budget.

This decision is as important as pricing your business, as it directly impacts your financial health. This guide analysis the real costs and hidden expenses of each option. No fluff, just practical advice to save your business thousands.

The Real Cost of Your Equipment

The sticker price on equipment is usually just the tip of the iceberg.

Equipment’s true costs go way beyond what you see on the price tag. Before we delve into the analysis, it’s important to understand these hidden expenses.

Initial Purchase vs Monthly Lease Payments

When looking at equipment costs, there’s more than meets the eye. A quality forestry bucket truck with a chipper body costs $30,000-$50,000 to purchase outright. That’s serious money tied up in one asset for small business.

Leasing reduces this upfront burden with manageable monthly payments, keeping your working capital free for other business needs. Be careful when selecting lease types. A $1.00 buyout lease typically carries higher monthly payments than fair market value leases, though you’ll have more equity at the end.

Hidden Maintenance Expenses

Many tree service companies set aside 10-15% of their yearly budget for equipment maintenance.

If you are equipment owner, you need to bear all maintenance responsibility, from scheduled service to emergency repairs. With leasing, the responsibility varies: short-term rentals might include maintenance, while long-term leases often require you to handle routine upkeep.

The hidden factor in both scenarios lies in operator training. Poorly trained staff increase costs through:

• Excessive fuel consumption
• Accelerated equipment wear
• Unnecessary idling time
• Higher repair frequency

These operational costs hit your bottom line whether you own or lease.

Insurance and Storage Costs

Tool and insurance are another necessary expense that many overlook. Whether you are buying or renting, both ownership models require insurance coverage.

Equipment owners typically pay $1,000-$5,000 annually (5-8% of operating costs) for comprehensive coverage. Even basic equipment insurance (known as “inland marine coverage“) starts at $155 yearly. And you also need business equipment protection policies, which begin at $23 monthly.

Leasing doesn’t eliminate insurance needs, most agreements require you to maintain coverage, though some offer damage waiver options at additional cost.

Storage is another often-forgotten expense. Owners need secure space for equipment they’re not using. Meanwhile, some lease agreements offer seasonal return options, but usually with re-delivery fees when busy season returns.

Tracking these complete costs requires a systematic approach. That’s where tools like ArborNote come in.

Our work order feature shows exactly which equipment is used on each job and for how long. You can also export all data to do the overall calculation. This precise tracking reveals the true cost of your equipment, whether leased or owned.

For any equipment based services, profitable operations depend on understanding your complete equipment and crews. If you can’t measure it, you can’t manage it.

The Benefits of Lease

Operational flexibility and financial efficiency are the two undoubted priorities you should consider when thinking about leasing. Many of our successful clients learned that sometimes leasing isn’t just an option, it’s the smartest move you can gain advantages from.

The Seasonal Money Game

Tree service business cycles match perfectly with seasonal payment structures. Winter months bring less work, and when you stick with one payment structure year-round, it can reduce your cash flow faster than a broken chainsaw.

Modern leasing programs understand this reality. Many specialized tree industry leases let you match payments to your actual work patterns, higher payments during busy months, lower during slow seasons.

Some programs can even track your actual equipment hours. This flexibility helps especially for small business maintain stable cash flow throughout the year during slower seasons. For a business that might see over 60% of annual revenue between April and October, this flexibility can mean the difference between stress and stability.

Cash Flow and Growth Considerations

Here is the crucial part about leasing that most people miss. While everyone’s focused on monthly payments, the real advantage is what leasing does for your working capital. Think about it in this way:

• No massive down payment to consume your cash flow: Leasing usually needs no substantial down payment. It’s huge to save and keep your money working in marketing and hiring
• Write off those lease payments come tax time: Lease payments qualify as business expenses and directly reduce taxable income. A $2,000 monthly lease payment generally means about $500 in tax savings for companies in the 25% bracket.
• Know exactly what you’re paying each month, no surprises

And here is the even better part. When you’re ready to expand, you can take on new contracts without draining your bank account. We see this work time and time again with growing businesses when:

• A new service territory opens up
• Demand spikes
• You need to start your business profitable, fast

Testing New Tree Service Equipment

Equipment testing becomes practical through leasing without long-term commitments. This approach lets you:

• Try Before You Buy: Test that new compact loader or specialty saw for at least 3-6 months before deciding if it’s worth purchasing.
• Stay Current: Upgrade to newer models every 2-3 years. In specialized equipment, these improvements can mean 15-20% productivity gains.
• Avoid Obsolescence: Return equipment after the lease term if it doesn’t perform as expected. This flexibility is particularly valuable with rapidly evolving equipment categories.

For the equipment you want to keep, a capital lease is a good choice. Benefit from depreciation and interest deductions to reduce taxable income, and have flexibility for further choice.
ArborNote’s invoice dashboard helps you clearly track revenue generated by each proposal, making it easier to determine whether leasing or buying makes more financial sense for your specific business needs.

The Benefits of Buying Equipment

Tree service equipment purchases make sense in specific situations. This choice works well for companies that are looking ahead and want long-term value.

Equipment Usage Analysis

High equipment usage rates make buying more cost-effective than leasing. Companies that run their equipment more than 65% of available working hours typically benefit from ownership, but that percentage deserves closer examination.

What does 65% utilization really mean? For a standard 40-hour work week, that’s about 26 hours of actual operation time. Track your equipment usage carefully, if that chipper, bucket truck or any your tree care equipment consistently runs 5+ hours daily, ownership starts making financial sense.

The usage pattern matters too, not just total hours. Equipment used steadily throughout the year justifies purchase more than seasonal-use items.

The math is straightforward: The more you use a piece of equipment, the faster you recover your investment and the lower your per-hour operating cost becomes.

Long-term Cost Wins

Buying equipment is like playing chess, not checkers. After you get past that initial cash hit, you will get a nice pay off. Our analysis of the break-even point between leasing and buying shows:

• Your costs drop like a rock once loans are paid (typically after 3-5 years)
• You build real equity, something leasing can’t touch: A fleet worth $250,000 strengthens your balance sheet substantially. It improves your position a lot when seeking business loans.
• Resale value puts money back in your pocket: Well-maintained equipment retains 30-50% of its value after years of service.
• You control maintenance costs (this is huge): You determine maintenance timing and providers, and potentially saving 15-25% over lease maintenance programs.

Uncle Sam’s Gift to Equipment Buyers

Here’s another thing that could save you serious money: Section 179. The IRS actually wants you to buy equipment. They’ll let you:

• Write off the full purchase price right away
• Grab bonus depreciation on new AND used gear
• Take up to $1,085,000 in deductions for 2024
• Cut your taxes through depreciation

These aren’t small benefits.

For a tree service company in the 25% tax bracket buying a $45,000 chipper, Section 179 could save you $11,250 in taxes the first year. That’s real money back in your business instead of going to the IRS.

How about the interest on your equipment loans? That’s deductible too. Every payment you make delivers another tax advantage that lease payments can’t match. For a $100,000 equipment loan, this might mean an additional $5,000-$7,000 in tax deductions during the first few years.

For more specific information, we highly recommend going to IRS to find the corresponding rules that apply to your business.

The Real Break-Even Math

While understanding the pros and cons of buying vs leasing helps narrow your options, smart tree service owners will double-check their choice with hard numbers using Return on Investment (ROI) calculations.

But getting those numbers right? That’s where challenges lie in these two numbers.

Here’s how this plays out in real life, let’s walk through an actual example with real numbers:

A tree service looking at a $50,000 chipper with $5,000 in setup fees runs:

On the plus side:

• 20 more work days at $800 extra revenue each = $16,000
• Cutting 2 workers × $150 daily × 25 work days = $7,500
• Total upside = $23,500

On the minus side:

• Fuel costs: $2,000 annually
• Maintenance and parts: $1,500
• Insurance bump: $800
• True annual profit = $19,200

Final ROI calculation:

• ($19,200 ÷ $55,000) × 100 = 34.9%

At nearly 35% ROI, this equipment pays for itself in under 3 years, making it a solid buy rather than lease candidate.

There might be some other plus and minus such as tax benefits, equipment resale value, or opportunity costs of capital, but the basic principle remains the same.

As this comparison table shows, both leasing and buying have their distinct advantages depending on your business situation. The right choice ultimately comes down to your cash flow, usage rates, and long-term business strategy.

What You’re Looking At	Leasing	Buying
Money Upfront	Almost nothing	USD 30,000-50,000 for standard forestry bucket truck
Monthly Hit	Fixed payments (they vary by deal)	ZERO after you’re paid off
Keeping It Running	Usually covered in lease	USD 5,000-10,000 yearly (10-15% of your budget)
Insurance Pain	Not specified in lease terms	USD 1,000-5,000 yearly (5-8% of operating costs)
Tax Breaks	Write off those lease payments	Full price deduction (Section 179) up to USD 1,085,000 in 2024
Freedom to Move	Test drive new stuff Upgrade when you want Pay when you’re busy	Build real equity Control maintenance costs Get money back on resale
Perfect For	Seasonal work Equipment testing Keeping cash free Growing fast	Heavy use (>65% of time) Established operations Long-term planning
Money Over Time	Payments never end	Costs drop like a rock Build equity Potential 32.73% ROI

At ArborNote, we’ve designed our software to help tree service companies track exactly these metrics. Whether you choose to lease or buy, we help you maximize the return on every piece of equipment in your business.

Good luck with your equipment decisions this season!