Buy or hire plant for a contract: how to run the numbers

You’ve won the contract. It needs a machine you don’t own: a 40-tonne excavator, a tipper, a loader, a crusher. Now comes the question that decides whether the job makes money or just keeps you busy: buy it or hire it?

The answer comes down to three numbers, and most owners only work out one of them.

What are the three numbers?

1. Total hire cost for the life of the contract, including delivery, float, damage waivers and any standby charges when the machine sits idle.
2. Total ownership cost for the same period: repayments, deposit, insurance, registration, servicing, tyres, and the cash you lock up.
3. Exit value: what the machine sells for, or earns, once the contract is over.

Number three is the one that flips decisions. A machine bought for one 9-month job and sold into a soft market can cost more than hiring ever would. A machine bought for one job that then works for five years can be the best purchase you ever made.

How do you work out the break-even point?

Keep it simple. Put both options side by side over the contract term:

Line	Hire	Buy (financed)
Monthly cost	Hire rate, plus delivery and return	Repayments
Running costs	Often fuel only (dry hire)	Fuel, servicing, insurance, registration, tyres
Upfront cash	Small bond, if any	Deposit and fees
End of contract	Hand it back	Sell, redeploy or keep paying
Risk if the job stops early	Hire can usually end sooner, check the terms	You still own the machine and the debt

A worked example (illustrative). A civil contractor wins a 10-month job needing a tipper. Dry hire is quoted at $9,000 a month, so $90,000 over the term. Buying a used tipper for $180,000 might mean repayments around $4,000 a month plus $1,800 a month for insurance, servicing and registration, a deposit of $20,000 and an expected resale of $140,000 at month 10.

Cash out over the 10 months is about $20,000 deposit + $40,000 repayments + $18,000 running costs = $78,000. At month 10 the loan still has roughly $120,000 owing. If the tipper sells for $140,000, the sale clears the loan and leaves $20,000, so the net cost of owning is about $58,000 against $90,000 for hire. If it sells for only $110,000, you’re $10,000 short on the loan and the net cost is about $88,000, which is no better than hiring. Those round numbers are made up; put your own quotes in. The point is how much the resale figure moves the answer.

The method is what matters. If buying only wins when the resale figure is optimistic, hire. If buying still wins with a cautious resale figure, or the machine has another job lined up, buy.

When does buying usually win?

• The machine will be busy for most of its working life, not just this contract.
• You’ve got a second contract, or a pipeline, that needs the same equipment.
• Hire rates in your area are high or availability is poor at peak times.
• You can service it, or already have a mechanic.
• The finance term and the machine’s useful life line up.

When does hiring usually win?

• The contract is under about a year and there’s nothing behind it.
• It’s a specialised machine you’ll use for one phase of the job.
• You’d have to spend your deposit cash on it, and that cash is better kept for wages and fuel.
• You’re unsure the client will keep the contract running. Check how hire can be ended early.

Not sure which way the numbers fall? Our enquiry form takes about a minute and doesn’t touch your credit file. Tell us about the contract and we’ll show you what funding would look like.

What does the tax side look like on heavy plant?

Here’s the catch that surprises owners: the instant asset write-off won’t help much. The ATO says the $20,000 instant asset write-off has been made permanent for eligible small businesses from 1 July 2026, and the limit applies per asset. Most excavators, tippers and loaders cost many times that.

Assets over the threshold are generally depreciated. Under the simplified rules for eligible small businesses, that usually means the small business pool, where the ATO’s company return instructions set out how the general pool is deducted each year. Assets can also be depreciated using their effective life under the ATO’s determination, which was updated in late 2025.

Hire charges, by contrast, are generally a deductible running cost in the year you pay them. That doesn’t make hire the cheaper choice, but it does mean you shouldn’t count a big write-off as part of the case for buying. Ask your accountant how your own structure treats each option before you commit. Our guide to the instant asset write-off covers the threshold in more detail.

Who pays for the operator, and what does Payday Super change?

Dry hire means you supply the operator, so wages and super are yours. From 1 July 2026, the ATO’s Payday Super rules require super to reach employees’ funds within 7 business days of payday, rather than quarterly. A new contract with two or three extra operators means more cash going out every pay cycle, well before the client’s first payment arrives.

Wet hire puts the operator on the hirer’s payroll instead. It costs more per hour, but for a short job it can be cheaper than recruiting, inducting and paying staff you won’t need afterwards. Compare it as a third column in your table.

How do you pay for it while the client takes 30 to 60 days?

Whatever you choose, the machine starts costing money on day one and the client’s first payment turns up weeks later. That gap, not the purchase price, is what sinks most contract businesses.

Map it out week by week:

1. Week 0: deposit, bond, delivery or float, site inductions.
2. Weekly: wages, super, fuel, subcontractors.
3. Monthly: hire or repayments, insurance, supplier accounts.
4. Inflow: first progress claim, then the payment terms in your contract.

The cash runway calculator helps you see how long you can run before the first payment lands.

The usual tools:

• Equipment finance to buy the machine, so the deposit doesn’t swallow your working cash.
• A line of credit or working capital loan for fuel, wages and the first month of hire.
• Invoice finance to release cash against approved progress claims instead of waiting on 60-day terms.

Mining and resources contractors face this gap more than most, because large clients pay on set cycles regardless of when you mobilise. Our mining services funding page covers that side.

Can you mix hire and buy?

Often the smartest answer. Own the machine you know will work year-round, and hire the specialist item or the extra unit for the peak. That keeps your debt tied to assets with a future and your hire bills tied to work with an end date.

If you’re comparing the cash-only route against finance, our equipment finance vs paying cash comparison lays out the trade-offs.

What will a lender want to see for a contract-based purchase?

A contract helps, but it doesn’t replace your track record. Have these ready:

• The contract, or the letter of award, showing the term, value and payment terms.
• Your bank statements, so the lender can see how the business actually trades.
• A quote for the machine, or the hire quote you’re comparing it with.
• Your plan for the asset after the contract: redeployment, sale or hire-out.
• A simple cash flow showing how repayments are covered if the client pays late.

Lenders get more comfortable when the plan covers the bad scenario as well as the good one. If the client pays 30 days late, can you still meet the repayments?

Is borrowing the right call here?

Sometimes it isn’t. If the margin on the contract only works when everything goes right, a loan will not fix it. Re-price the job, ask for a deposit or progress payments in the contract, or hire and keep your options open. Borrowing makes sense when the job is profitable with a cautious resale figure and a late-paying client.

Where Capital At Call fits in

Good contracts get won faster than they get funded. If you’ve landed a job and you’re working out how to pay for the machine, the operators and the wait for the first payment, we’d like to hear about it.

Enquiring takes about 60 seconds, and nothing happens to your credit file just because you asked. We don’t pass your details around a pile of lenders, so your phone won’t light up with strangers. A real person reads your situation and calls you to talk through the options, from equipment finance to a standby line of credit.

One request: please fill the form in accurately, with real turnover, the real contract value and your actual credit history. It lets us match the right option first time rather than starting again.

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