when has a piece of gear "paid for itself?"

[Kevin McRoberts]

Depends.

Situation B is the most frequent, either when a Shmegeggidy earns its purchase + depreciation back in rental fees (ie camera and support gear) or in time/money savings (ie computer hardware, post software, plugins, etc... obviously these can overlap)

Situation A also occurs with gear as others have alluded, where not having a Shmegeggidy would mean not getting that work... personal example, a few years ago I was contacted to do a job where they wanted lots of slider whizzing about. I didn't own a slider, but inquired on the day rate and then said, "sure, I have a slider" and ordered one right after ending the coversation. Since, without the slider, I would have earned $0 that day, the gear paid for itself on that single job.

Naturally rationalizing Situation A too often or improperly can lead one to poverty right quick... if I splurged on a C300 with pails full of 15mm froofery and told myself I only got 3 months of work because of its ultimately hyperhyped awesomenity when said web profile video work could have been adequately produced with a second-hand handheld HVX, I would be dumb and poor.

On the other hand, if the Very Famous Mr. Directy McIndepententlywealthyerton happens to patronize the coffee shop where I happen to be flawlessly executing unmotivated rack focuses for their 1 minute web video and, dazzled by the resplendence of my uncompromising wire-festooned erector set, offers me great sums of cash to DP his big-budget feature "Ironic Referencing Dubstep Superhero Zombies for Progress," then I could justifiably state that, sure, all that crap paid for itself. Of course making purchases on the likelihood of the above scenario leads one to the outcome of the previous scenario.

[Josh Bass]

For not owning vs owning in that regard, honestly it's really a 6 of one situation. Anything I don't have I can likely rent from a few select colleagues for below rental house prices, the savings which I pass on to the client. Makes no difference in that case whether I own an EX1/slider/etc. or not if I can simply source it from someone else, unless it's one of those weird clients who insist you own everything. The difference, then, is how much of what I charge them is profit for me vs a check written to someone else.

[Kevin McRoberts]

Originally Posted by Josh Bass

For not owning vs owning in that regard, honestly it's really a 6 of one situation. Anything I don't have I can likely rent from a few select colleagues for below rental house prices, the savings which I pass on to the client. Makes no difference in that case whether I own an EX1/slider/etc. or not if I can simply source it from someone else, unless it's one of those weird clients who insist you own everything. The difference, then, is how much of what I charge them is profit for me vs a check written to someone else.

Typically better to rent if it's not something you'd use frequently, but better to buy if you do use frequently. In the slider example, it made sense to own one, and the job "paid for it," plus some. I've used it, rented it out, lent it... now it's just part of the kit that I don't have to beg, borrow, or steal if a short-notice job pops up.

That same job also spec'd shooting on 5D3, which I didn't own and didn't want to own after the job was over... I rented that as simple CODB.

There's also "flipping" to be considered... one job over several days this summer spec'd broadcast codec, so I bought a Ninja2. Since I didn't need it afterwards for any of the work I'd lined up, and all it would do would sit in a box and depreciate, I sold it. The price difference was less than the rental fee would have been (let alone shipping), plus I used it on a few jobs in between for the heck of it. This is as tricky as flipping anything else, though, and can sometimes lead to an ungood result. I tried to do the same thing a few years ago with a used Z1U, and right before I listed it for sale after the jobs were done, the tape mechanism flew southward... the repair killed any cost savings in that venture, and then I wound up holding on to it for longer than I needed in anticipation of another job spec'ing Sony HDV popping up to justify the expense, which never happened, meanwhile all things tape-based merrily and steeply depreciated. That sucked.

[Josh Bass]

Yeah, flipping sounds great in theory but dealing with ebay/shipping/paranoia etc. = not fun.

Define frequently? I just had an insane two weeks that probably would have half paid for a camcorder (hindsight eh?), but I will also go months without shooting once!

[Duane Adam]

At tax time when I can deduct it from income.

[Kevin McRoberts]

Originally Posted by Josh Bass

Define frequently?

often enough that it would quickly pay for itself.



Circular arguments are fun!

[Chris Davis]

Josh, there are several freely available tools and websites out there that will help you perform a return-on-investment analysis. However, to use them, you need to be prepared to quantify some apparently ineffable values in dollar amounts, such as greater margin driven by higher production capability, fewer mistakes and time-consuming errors, improved quality, etc. Once you can put an annual value on those (and other benefits) it becomes a simple calculation. Just google "ROI analysis".

You also may want to do a comparative analysis before buying a piece of equipment. For example, with my current skill set, I would see no difference in ROI in buying the latest sexy $5,000 camera over a used $2,000 HMC-150. I might *want* that sexy new camera, but the numbers simply wouldn't show a benefit.

[Josh Bass]

Thanks. Unfortunately in regards to "prosumer-ness of gear", my clients run the gamut from other production companies to small clients who couldn't care less what I use. For those larger folks I do need something nicer, as sometimes they specify camera/quality/etc. And I never know who's going to call next so the safe bet is to go bigger/better.

[Gabe Strong]

First, regarding 'depreciation'. I NEVER, EVER, EVER try and keep track of it. I always use the
section 179 expense. Things like cameras and computers just lose their value too quickly, I see it
as within a year they lose so much value that I'd rather just take the entire amount as a write off,
and not try to keep track of them over multiple years with depreciation. This is of course only
my opinion but it makes no sense for me to try and depreciate gear. This is probably because
I do my own taxes, and like to keep things as simple as possible.

As for when something 'makes you money' that can be a hard one. I can give a couple examples
though. I used SD gear until recently as no clients wanted HD deliverables (I tried advertising HD
services, hoping to give myself a reason to buy a shiny new HD cam.). Had 1 client go for it in 3 years
so just rented some HD gear from the local PBS station. Then 2 years ago had 4 clients book HD
projects in 1 week. BAM! Now I have a FS700 and VG20......yup they were paid for by clients
requesting HD projects that I couldn't do without purchasing new HD gear. Most often, I do
this, wait for a project or a number of projects to come together and use a portion of the
advance payment to buy new gear.

In a different case, I also bought a slider this year. No actual project that HAD to have it, but I felt
it would greatly enhance some upcoming projects. So I bought it. I have had three new clients
that remarked on how they hired me because of two demo videos which coincidently featured lots of
slider shots. Would I have got the work without the slider? Maybe, maybe not. That one falls into
a 'may have helped me make some money' category, but no real way to qualify it for sure.
I think for many of us, a lot of purchases fall in this 'gray area'. You WANT it and try and justify it to
yourself, but no real way to prove how much money it brings in. You need to be honest with yourself
and keep the 'want' purchases to a minimum and that is hard. At the same time, you need an
appropriate amount of gear to do a nice, bang up job when you do get work, to show that you
can do nice stuff. To be honest, it's a balancing act and its tricky to get right, which is one reason
so many video businesses fail. I saw several competitors jump into HD about 5 years before I did,
but clients didn't want BluRay and so they spent money for nothing really. By the time the market was
ready for HD, they were out of business. Gotta be lean, be smart, and probably be lucky too! When
you buy gear, try and get stuff that will last...it's not easy, if it was there would be even more video
professionals out there.

[Josh Bass]

The projects I work on don't tend to be that creative, OR the creative side has already been decided and I'm brought in last minute to execute (i.e. I wouldn't be the one making decisions about sliders, etc.). Of course that kind of applies to things like monitors and handheld rigs, things you may not necessarily be justified in billing extra for (depending on your philosophy) but things that make your life easier and ultimately make the image better.

Yeah, this is getting a little ridiculous. I've probably rented an EX 7 times in the last several weeks, which is insane for me. If that cam was mine, even charging the very generous rate I pay for the rental, I'd have that thing half paid off by now. If I wasn't convinced it was a fluke I'd buy one this instant. DAMN IT TO HELL!

[Paul R Johnson]

It's more complicated when the funds you use to purchase and asset are borrowed, rather than already existing as funds in your bank account. My own version of 'when is it paid for?" is simply when the purchase has generated it's purchase cost, ignoring the depreciation, which in my books just shows the shrinking value of the item. So for me, the kit I purchased back in April could be considered 'paid for' as it's been in continual use - BUT - the user in this case is not paying for it, because I'm using it myself. My calculations are based on how much I saved by not renting it - and this is how I reckon it's paid for - playing the hire cost against purchase price. For much of my equipment, the conclusion I have is that it's not paid for at all, but some is now worthless in it's book value. So I guess, you can decide why way to work it out for yourself.

[Christian Brown]

Robert's got it right:

Originally Posted by Robert Benda

There are three reasons to buy a piece of gear:
1) it allows you to do work you couldn't before. This means new jobs are opened up, and if you start booking them, it will pay for the gear, but out of the gear portion of your income.
2) the gear improves your work. This would allow you to raise your rates, or in a tough market, maybe it's what is needed to keep up. Or will spending the money on those wireless microphones make editing quicker? OK, then it pays for itself that way.
3) makes your work easier or more enjoyable for you. This is entirely selfish, and is about quality of life. This gear doesn't pay for itself, but still gets paid for. These are often the toys and impulse buys.

[Jan Luethje]

Very interesting thread regarding a question I asked myself several times. I'd like to add another aspect in favour of owning gear: Reliability! The gear I own is a) in a good shape because I take care of it and b) I'm really familiar with it. This is an advantage in a difficult market that shouldn't be underestimated, because it is directly influencing the quality of your work. Who of us didn't have that kind of "nightmare jobs" with rental equipment, when camera settings were completely screwed, batteries were not charged, parts were simply broken, etc....? You may give your clients an explanation, but most of them won't care. "This job was kind of difficult" is what they will actually remember. And book someone else next time...

[Josh Bass]

I was under the impression professional rental houses wouldnt stand for that kinda thing, i.e. They wouldnt rent broken crap to you. As for batteries etc. i would always put the burden on the renter to make sure theyre charged.

[Tim Polster]

It does happen and is a pitfall of renting in my mind. I had a rental once where the power cable was left out. There were two batteries though, one was dead and one had half a charge. This was a long time ago and I should have checked before getting to the location, but I trusted the professional rental house.

Larger on my list is being familar with equipment, especially cameras. So many settings on cameras these days that renting is tough if you want a certain look in-camera.