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Free equipment decision calculator

Will this equipment earn enough to justify the cash and risk?

Separate hopeful revenue from contribution, count setup and operating costs, protect your reserve, and compare payback with a return threshold you can defend.

Quick answer

Equipment earns a yes only when operating benefit, cash, payback, and required return agree.

Start with the full upfront cash commitment. Add only the revenue contribution and cost savings you can support with evidence, subtract new operating costs, then test whether the purchase preserves the reserve and creates value at your required return.

Net monthly benefit = added revenue × contribution margin + cost savings − added operating costs

Net present value = discounted monthly benefits + discounted end value − upfront investment

Reviewed August 15, 2026

Step 1

Build the investment case

Upfront commitment
$

Cash purchase price before shipping, installation, training, or setup.

$

Delivery, installation, permits, initial training, launch downtime, and other one-time cash costs.

$

Conservative sale or trade-in value expected at the end of the planning horizon. Enter zero if uncertain.

$

Cash the business can commit after preserving the operating reserve it refuses to spend through.

Monthly operating effect
$

New monthly sales tied to capacity, quality, speed, or demand this equipment can actually serve.

%

Share of added revenue left after materials, payment fees, fulfillment, and other non-equipment variable costs.

$

Monthly labor, waste, rental, outsourcing, repair, or other cash costs the equipment is expected to eliminate.

$

Maintenance, software, energy, insurance, supplies, calibration, or other recurring monthly costs added by the equipment.

Decision threshold
months

How long this specific decision case should be judged. Keep it at or below the period you can defend.

%

Minimum annual return required to compensate for risk and the alternative uses of this cash.

This is an educational planning model, not tax, accounting, financing, valuation, or investment advice. It does not model loan or lease payments, taxes, depreciation deductions, working-capital timing, downtime, implementation failure, or inflation. Compare the cash flows that actually apply to the purchase.

Understand this decisionIs this equipment worth buying?Compare full cash commitment, operating benefit, payback, reserve protection, and required return before buying.Read the guide →

Four separate tests

A fast payback can still hide a bad purchase.

Payback says how long operating benefit takes to recover the upfront investment. It says nothing about the value created after payback, the timing value of money, or whether the purchase drains cash the business needs elsewhere.

Keep the tests separate: monthly operating benefit, protected cash, payback inside a useful horizon, and value above the required return. A case that survives all four is stronger than a single attractive ratio.

Review the exact formulas →

Do not let one ratio decide

Pressure-test the equipment case

Should added revenue use sales or profit?

Enter added sales, then use contribution margin to remove the materials, fees, fulfillment, and other variable costs caused by those sales. Counting gross sales as benefit overstates the equipment's economics.

What belongs in setup costs?

Include delivery, installation, permits, initial training, integration, launch downtime, facility changes, and other cash commitments required before useful operation. A purchase price alone is rarely the full commitment.

How should I choose the required return?

Use a threshold that reflects risk and the best realistic alternative use of the cash. The calculator does not prescribe a universal rate. A fragile estimate should not be rescued by choosing an artificially low hurdle.

Does this compare buying with leasing or financing?

No. This version tests a cash purchase. Compare each financing or lease proposal using its actual deposit, payment timing, fees, maintenance obligations, purchase option, and tax treatment instead of forcing them into this model.