# Should you buy equipment to win a public contract?

> Buy equipment for a public contract only if the numbers work over the guaranteed term, not the hoped-for extensions. Compare buying, leasing, renting and subcontracting, price the cost into your bid fairly, and check the termination and volume terms. Equipment that has other uses after the contract ends is far less risky than a machine bought for one job.

By James DeGreef. Updated 2026-10-24. Facts checked 2026-10-24. Source page: https://crewbid.tech/articles/buying-equipment-for-a-contract

A contract that needs a second loader, a bigger sweeper or a fleet of mowers can double your business, or sink it. The equipment question comes up in nearly every growing trade business that bids public work, and there is no single right answer. But there is a right way to think it through.

## Start with what is guaranteed

Public contracts often look longer than they are. "Three years plus two one-year extensions" is a guaranteed three years at best, and many contracts also let the buyer end the contract early for convenience with notice. Some contracts, especially "as and when required" or snow contracts, guarantee no volume at all, unless there is a retainer or standby payment.

Before you buy, read:

- **The firm term** and how extensions are decided. See [keeping a contract at renewal](https://crewbid.tech/articles/keeping-contract-at-renewal).
- **Termination clauses,** including notice periods and what the buyer pays if it ends early.
- **Volume guarantees** or retainers. A standby fee for equipment changes the math completely.
- **Equipment requirements:** age, size, backup units and whether the buyer names specific machines.

Plan your payback on the guaranteed part. Treat extensions as a bonus, not a plan.

## Four ways to get the capacity

1. **Buy.** Lowest cost over a long life, and you own an asset. Highest risk if the contract ends. Ties up cash or credit.
2. **Lease or finance.** Spreads the cost. Watch the term: a five-year lease on a three-year contract leaves two years of payments with no revenue unless you find other work.
3. **Rent seasonally.** Higher cost per month, but no long commitment. Good for peaks and for proving out a new contract.
4. **Subcontract or partner.** Another firm supplies the machine and operator. Lower margin, but little risk. See [subcontracting on public work](https://crewbid.tech/guides/subcontracting-public-work).

Many firms combine them: buy the core machine, rent for peaks, and keep a subcontractor on call as backup.

## Pricing equipment into the bid

Equipment cost belongs in your rates, spread over the units you expect to bill:

- **Ownership cost:** purchase price minus expected resale value, spread over the years you will use it, plus financing costs.
- **Operating cost:** fuel, maintenance, tires, insurance and licensing.
- **Downtime and backup:** what you will do when it breaks, because buyers will ask.

Be careful about recovering the whole machine from one contract. If your competitors already own their equipment, your price will look high. If you will use the machine for other work too, you can spread the cost more widely. If you will not, you need to be honest about the risk. See [the unit-rate trap](https://crewbid.tech/articles/unit-rates-estimated-quantities).

## Questions to ask before you buy

- **Does it have other uses?** A loader that plows in winter and moves material in summer is safer than single-purpose gear.
- **Is there a resale market?** Common machines hold value. Specialised ones may not.
- **Can I operate it?** Do you have trained operators, or will you have to hire? See [hiring for a contract you just won](https://crewbid.tech/articles/hiring-for-a-new-contract).
- **Can I store and maintain it?** Yard space and a mechanic matter.
- **What does the bank think?** Lenders look at contracts too. A signed public contract can help with financing, but they will look at the same term and termination clauses you did.
- **What if I lose the retender?** Have a plan B for the machine.

## A simple test

Build a small sheet: purchase cost, expected resale after the firm term, financing, operating costs and expected revenue from the guaranteed term only. If the contract pays for the machine within that term, with a reasonable margin, it is a sound buy. If it only works with the extensions and good luck, rent or subcontract for the first year and decide once the contract has proven itself.

Equipment is not the goal. Steady, profitable work is. Read [year-round work from seasonal contracts](https://crewbid.tech/articles/year-round-work-seasonal-contracts) for ways to keep machines busy across the year.

## Sources

- [City of Prince George snow clearing retainer, 2026–2027 form of contract (sample)](https://www.princegeorge.ca/sites/default/files/2026-02/Equipment%20for%20Hire%202026-2027%20Form%20of%20Contract%20%28Sample%29.pdf)
- [City of Coquitlam RFP 25-027 Snow Removal Service (an example of a multi-year term with extension options)](https://www.coquitlam.ca/DocumentCenter/View/15694)