Is it more cost effective to buy or rent a trade show display? We do a quick analysis to help your company decide which makes the most sense.
For many companies, both large and small, the decision on whether to rent or buy a trade show exhibit hinged more-so on financial factors including total cost of ownership, cash flow and even the stage of a company’s product life cycle. This was particularly evident during the recent financial crisis as many organizations, even those that have historically owned their exhibit, made the conscious decision to leap into this type of renting scheme. As the economy continues its slow crawl from the financial doldrums that began in 2007, the anticipated switch from lease to buy has happened but to a much lesser extent. In retrospect, what is taking place is a paradigm shift in the way companies are purchasing these services.
In our opinion, a large part of this shift is due to the increasing innovations in modular exhibit systems which allows for custom-looking designs using leased modular components that can integrated for any size exhibit desired. In addition but to a lesser extent, ambiguity and lack of direction from the IRS regarding Sec. 179, which allows for 100% write-offs for these type of purchases, has forced companies to delay these large purchases and subsequently led them to rent their exhibits in the interim. Post Script, the ‘Fiscal Cliff’ Bill of 2013 has since offered clear direction on the dollar limitation for 2013.
Typically, our guidance to our clients is to rent an exhibit if attending two or less shows per year. Alternatively, as depicted in Table 1 below, we recommend an outright exhibit purchase as total cost of ownership in a purchase scenario (depicted as ‘Running Cost’ below), exceeds the running cost under a leasing scheme at Tradeshow 3. In this example, Tradeshow 3 becomes the so-called break-even point where the cost to lease exceeds the cost to purchase.
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