Gear Depreciation

[Christopher S Johnson]

When you guys make a gear purchase, how much do you assume to lose in depreciation over the life of lenses, camera bodies, and AKS?

 

[Uros Zuraj]

Depends on the gear...
I bought Astera Titans set as I knew they would pay of in two months.
I bought Red Epic back in the days as everyone around me had Sony FS700 and wanted to step outside of that. Never planned to get back from rentals but from getting more jobs and people would get to know me in the industry. Still probably one of best gambles I took. Camera paid it self from the few rentals here and there over the years (in between hopped onto a Dragon which I still rock hard), but the big impact for me was when we came to a shoot with Red cameras athletes where impressed and did everything at 120% as they wanted the best footage out there and that made our videos better as well and then the client wanted more,... and we just progressed. Everything came together...

And then there are investments where you loose money. You use it on one or two jobs, noone rents it,... and it is what it is. For me that was PL MotionMount thank god i sold it while it was worth something.

 

[Björn Benckert]

Im sure if the Corona pandemic does not blow over very quickly and then we will see a price drops like never before. As large rental companies will fold and flood the market with used gear. So what ever numbers was before I would not use the same numbers now when trying to calculate the ROI.

I think there is more than a few DPs out there that just had a few jobs cancled or postponed that sit and think, worst case I can sell my camera or lenses to pay the rent all while less people have the funds or will to invest.

Simply, supply and demand for camera gear is very different today compared to a few months back. Likly manufacturers see preprders being pulled back etc.

All things to think about before diving into some bold investments. Then sure on the other hand its buyers market so if shopping for expansive glas or such and you have your funds secure I think soon is the time to pull the trigger.

 

[Jason beaumont]

Im sure if the Corona pandemic does not blow over very quickly and then we will see a price drops like never before. As large rental companies will fold and flood the market with used gear. So what ever numbers was before I would not use the same numbers now when trying to calculate the ROI.

I think there is more than a few DPs out there that just had a few jobs cancled or postponed that sit and think, worst case I can sell my camera or lenses to pay the rent all while less people have the funds or will to invest.

Simply, supply and demand for camera gear is very different today compared to a few months back. Likly manufacturers see preprders being pulled back etc.

All things to think about before diving into some bold investments. Then sure on the other hand its buyers market so if shopping for expansive glas or such and you have your funds secure I think soon is the time to pull the trigger.

I think this description is a bit too apocalyptical. Big rental companies, wont fold, and neither should small ones assuming they were profitable before this whole crisis. I spend a lot of time researching, and buying gear. Over the last year probably about $250,000. Here are what ive learned about gear, and the rental economy.
Items like Teradeks/ Directors cages ect have the best ROI because they don't cost a lot and will rent basically forever.
Cameras like RED's in the past depreciated a lot faster because they were releasing so many, lately they have slowed this down and they have a started depreciating slower.
I think my Alexa Mini was my best investment. I bought it off of this forum actually for $55,000 , made that back in maybe 3-4 months, and that was a year ago, and im pretty sure I could still sell it for 30-40,000. When the LF was announced many people sold causing the price to drop, but the LF hasn't penetrated the market in a way that makes the mini obsolete, so it holds it value. The next big dip will happen when they release the mini 2.
Items like lenses, Lights, and certain accessories reach a minimum depreciation and then don't depreciate much past that. I try and buy things used at that price so I don't have to worry about losing money in my investment. I bought a cooke s4i mini set for $31,000 ( 6 lenses). that's an example of minimum depreciation. Even 5 years from now, I doubt the lenses will be worth less than that, if I sold them today, I could definitely get what I bought them for if not more.

Cameras, unpredictable, lights, last forever ( hence skypanel being one of the most profitable rental items of all time) ,lenses assuming they are quality, also should hold their value very well if you buy them used.

Edit:
I bought my Cooke Anamorphic lenses during this crisis $92,000. I wouldn't shy away from bold investments at this time. Lenders are extra friendly, and I'm betting on the economy bouncing back strong. The world is more resilient than we give it credit for. Also in the event of complete anarchy or zombie apocalypse, money will be useless anyway, and at least I can capture the end of the world in stunning detail with my new lenses lol.

 

[Björn Benckert]

Yes maybe the big rental houses will do just fine. But if this corona situation last for long for sure quite a few will take a hit and have to sell things off which will flood the market.

Hollywood pretty much hit the pause button, and hardly anywhere in the world you can shoot a bigger production right now. That will affect rental houses. And many of then was not exactly swiming in cash before the corona pandemic was a fact.

Only here in stockholm the bigger production houses has laid off people by the hundreds. And the rental houses sent home most of the staff. How long is such situation going to work you think before they start to sell of gear? And sweden is the last country in europe not to implement carantene. I can only imagine in those countries where people are in lockdown, even less cameras are rented out.

 

[Abiodun Shote]

Big rental companies, wont fold, and neither should small ones assuming they were profitable before this whole crisis.

PERFECTLY said!
I support Jason's thesis, considering the "whole" (WHOLE) world right now is consuming media at a never seen before speed. Quality content i.e. paid professional content (not talking Youtube free contents) which are the bed rock of rental industry will need to replenish their catalogue/bank of content. I know a lot of people who have depleted their "favourite" shows in any given genre on ALL the major streaming service. With possibility of 2-3months of lockdown ahead and no major production turning out new contents for the next 4-5months, what do you think will need to happen when we come out this pandemic?

My bet is production will withness a boom. BTW, what is the biggest expense during this pandemic? It will be food. Not rents, not loans. People are afraid it will be loans or rents and inability to meet up might affect credit ratings but the truth is that economies all around the world is on pause, so governments are negotiating with financial institutions and truth is the institutions don't have a choice as they are equally at home like every other persons. Imagine those whose rents have elapse in places where lockdown is in effect, how will evictions be enforced? Its sh!tstorm all over and all knows this. This almost like war time. almost zero activity cross board in most countries. Hence basic survival mode. Food! I see smart rental houses not selling anything. Even smaller houses. No point. What are you going to do will all the cash that comes in if you sell?

The other day I saw a 6 set of UP go off on ebay for $20k. That's probably the best deal of the century. I believe the people selling are these that bought specifically for some project which are now cancelled. As an example, a recent production I was supplying asked that supply 14 extra mini mags, I couldn't, so the producer offered that I buy and they offer me 50% of the buying cost as rental income over the 7 weeks project. Way I see it, it was a nice proposition because I was betting I could get at least a 5% discount from my dealer, I could offload this card after 7 weeks (I sure bet they will still look very neat) and my minimum selling rate just needs to be 45% of retail cost to make my investment back and also keep a happy client. So I agreed. Project got cancelled the exact day I bought the cards (after cards had shipped because I chose express delivery). Had to return the cards. There might be situations that are not this straight forward, those are the types I believe have to offload at dip prices, outside that (except for panic sales) I don't see anyone offloading their assets especially when its an acceptable guess that all these will pass away within next 3 months.

I bought a cooke s4i mini set for $31,000 ( 6 lenses). that's an example of minimum depreciation. Even 5 years from now, I doubt the lenses will be worth less than that, if I sold them today, I could definitely get what I bought them for if not more.

This is the only one I don't agree with. Cooke s4i mini is going to be losing value gradually because of its speed. Maybe not drastically, but I won't be overly optimistic it would a static value over the next 5 years as we are gradually seeing new market offerings

 

[Christopher A. Bell]

Depreciation is for tax purposes, not figuring out how soon the gear will “pay for itself” and/or turn a profit. Your accountant should be handling your depreciation schedule. Most large purchases are depreciated over several years. Sometimes they are or can be taken in a big lump sum. Depends on several factors.

 

[Terry VerHaar]

I read with interest the projections (above) that production will come roaring back. That argument, based only on supply/demand considerations - i.e. nothing is being produced now while all existing media is being "used" up, makes logical sense. However, what I question is just how production sets will work if people can't be/feel safe while on set. I think most scientist/epidemiological types believe that this particular virus may very well haunt us for many months (at least until we get better testing and treatment protocols and probably until we get a vaccine) and it's not likely to be the last such pandemic to hit us. Chances are, this battle with viruses may very well be a persistent issue going forward.

Personally, I believe we may see periods where we can work on-set with relative confidence (and a high degree of precaution and with safety measures) punctuated by periods where new viruses will make such work nearly impossible. I'd be interested in people's thoughts about this and how they think the future might look in the type of scenario.

 

[Christopher A. Bell]

I read with interest the projections (above) that production will come roaring back. That argument, based only on supply/demand considerations - i.e. nothing is being produced now while all existing media is being "used" up, makes logical sense. However, what I question is just how production sets will work if people can't be/feel safe while on set. I think most scientist/epidemiological types believe that this particular virus may very well haunt us for many months (at least until we get better testing and treatment protocols and probably until we get a vaccine) and it's not likely to be the last such pandemic to hit us. Chances are, this battle with viruses may very well be a persistent issue going forward.

Personally, I believe we may see periods where we can work on-set with relative confidence (and a high degree of precaution and with safety measures) punctuated by periods where new viruses will make such work nearly impossible. I'd be interested in people's thoughts about this and how they think the future might look in the type of scenario.

I don't think life and work is going to spring back to normal as quickly as some do. And honestly, for everyones sake, it probably needs to come back slowly, because I just envision the scenario where the "all clear" is given and everyone, tired of being isolated, just basically has a huge "orgy" and we're right back to square one or worse.

For certain productions, I could see doing it in isolation. Gather the talent and crew and other support personnel and quarantine everyone individually for the required period and test them. At the end of the period, test again and make sure everyone is clear and then you keep the entire production isolated and quarantined away from the rest of humanity(no one goes home) while it's going on so you don't have to worry about people being infected and spreading it/getting sick. This is similar to plans I have heard for the Chines basketball league, so that they can play and it's also been kicked around for the NBA, so that they can finish the season.

 

[Jason beaumont]

PERFECTLY said!

This is the only one I don't agree with. Cooke s4i mini is going to be losing value gradually because of its speed. Maybe not drastically, but I won't be overly optimistic it would a static value over the next 5 years as we are gradually seeing new market offerings

Ive made the $31,000 off the lenses in under a year anyway. Even if the depreciate a little bit they wont depreciate much, and other faster lenses wont effect Cooke lens price. They are a hot rental item because of the look. The Speed of the lens doesn't matter at all. What narrative piece is setting apertures below 2.8 any way. As lighting gets cheaper, and camera low light abilities get better, the need for super fast lenses isn't even as important. unless you want a shot where the talents nose is in focus but his ears aren't. majority of the projects I work on shoot at 3-4 f stop. I think ( or hope ) things go exactly back to normal. I have faith that humanity is resilient and our ability to adapt will allow life to go on, as it must.