Article

A deployer's dilemma: lease, buy or rent?

Deployers asking the question: pay now or pay later?

September 16, 2007

For a company looking to deploy kiosks, the initial cost of a rollout can sometimes be overwhelming. Some kiosk vendors are turning to leasing and renting options to help deployers get started.

 

For future deployers, leasing a kiosk is a lot like leasing a car. The lease serves as a financing program that spreads the cost of a kiosk rollout over a certain time period. Kiosk vendors work with banks, which they call leasing partners, to develop the financing programs for their clients.

 

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"The financing programs are great for us as vendors because we get paid right away," said Kevin Kent, director of business development for Meridian Kiosks. "The bank absorbs the risk of the lease."

 

The DS line is just one type of kiosk that Meridian offers for lease.

Kent said that a typical lease from Meridian is three to five years, with most lessees choosing the three-year plan.

 

Although spreading out payments may seem like a favorable option for companies planning a rollout, only a small percentage of companies actually do it.

 

"For most companies looking to deploy a kiosk, it doesn't cross their mind to lease," Kent said. Meridian, based in Aberdeen, N.C., has offered a kiosk leasing program for several years, although Kent says that they only see about one or two clients use the program each year.

 

"I wish we were doing more leasing," Kent said. "I think it'll come in time."

 

Kent says that one of biggest reasons leasing isn't used more often is because most of the companies who are looking to deploy kiosks are large and have their own financing through capital lease lines or predetermined lease options. They borrow the money from their own banks and don't have to go through the kiosk vendor or its leasing partner.

 

The story for smaller companies and startups is not as easy. Like getting approved for a loan, these companies have to qualify for the lease, mainly because there is so much up-front money involved. Ironically, Kent said that the small companies are usually the ones needing the lease as opposed to buying them outright.

 

"Usually it's not even a business applying for a lease, it's just someone with an idea," he said. "It's harder to get qualified without business support or capital."

 

Rent-a-kiosk

 

For some of those small companies and startups, even financing involves spending too much money. After all, the advice deployers get from vendors is to test the concept before investing in a rollout. One way to go about this is through a kiosk rental outfit.

 

One such company is Kiosks4Rent.com, a subsidiary of Kiosk Systems, Inc. CEO Glenn Richardson said that most of their kiosks are rented for tradeshows by all different kinds of companies. Kiosks4Rent.com rents all touchscreen kiosks which Richardson said are mostly used for questionnaires, Internet access or registration. The company has rented kiosks to organizers of PGA events and the NASCAR Pepsi 500 in Daytona Beach, Fla.

 

Renting kiosks does not have the same type of advantages for the kiosk vendors as leasing does. For one, they have to be shipped and returned, which inevitably increases the risk of damage. Kent said that Meridian also rents kiosks, and finds that people don't always package them up well when shipping them back.

 

"When we do get them back and something is broken, we don't want to be hard-lined and ask clients for $50 bucks for replacement parts after they just spent a lot of money on the rental," Kent said.

 

Kent also said that Meridian handles a lot of customer service tech calls from kiosk renters because they aren't as familiar with kiosks and often need help setting them up or operating them.

 

"We also found that rentals don't seem to be as popular because everybody wants something different," Kent said. "The kiosk space is so customized now."

 

When Meridian gets their kiosks back from clients, they strip the units clean of all the software that was loaded on them and clean the machines inside and out. They also have to remove any external graphics or branding from the outside of the kiosk.

 

"For us, rentals tend to be just as much work as leasing, but with less revenue," Kent said.