Why Construction Companies Pay $12,000 a Month for One Machine

Why would a construction company pay more than $12,000 every month to rent an excavator worth roughly $400,000 instead of simply buying it? The answer comes down to utilization, depreciation, maintenance, transportation, downtime and something rental companies understand extremely well: owning equipment and needing equipment are two completely different things. In this episode of Under the Margin, we break down the economics behind heavy-equipment rental, how companies such as United Rentals make billions from fleets of expensive machinery, why contractors willingly pay rental premiums, and how the same excavator can generate revenue multiple times throughout its life. Sources referenced include Caterpillar rent-vs-buy guidance, current Cat 336 rental and used-equipment pricing, and United Rentals financial filings. Under the Margin explores the hidden economics behind the businesses, industries and systems you see every day. Subscribe for new business documentaries. #Business #Economics #Construction