Chapter 2 · Buy vs Lease
The biggest equipment decision: buy your machines outright and own them, or rent/lease/revenue-share. Here's when each makes sense.
Learning objectives
- Understand three ways to get machines: buy, lease/rent, revenue-share with a route operator.
- Know the tradeoffs of each for a small shop.
- Recommend a sensible default for a first claw shop.
How you put machines in your shop (three paths)
1 · Buy outright (own them)
You buy new, used, or refurbished machines. You own the equipment, keep 100% of the play revenue, and control win rates, prizes, and placement entirely.
- Pros: highest long-term margin, full control, machines are resaleable assets.
- Cons: big upfront capital, you bear maintenance/repair and any market risk, and you're stuck with machines if the business changes.
2 · Lease / rent machines
You pay a monthly fee to rent machines from a supplier (or lease-to-own over time). Lower upfront, predictable cost, and the lessor usually handles maintenance.
- Pros: low startup capital, less maintenance burden, flexible if you're testing.
- Cons: higher long-term cost (you're paying for the machine plus a margin), less control, monthly obligation even in slow months, and lease-to-own can be expensive overall.
3 · Revenue-share with a "route" operator
An amusement route operator places their machines in a location and splits the revenue with the location owner. This is actually the most common beginner structure in the industry — and it works two ways around:
- You = the route operator. You buy machines and place them in someone else's business (restaurant, laundromat, store). The location takes 20–40% of gross (common 50/50 or 60/40 gross splits), and you keep the rest, plus you handle restock/service. This lets you start cheaper than a full shop and scale across many locations before committing to a store.
- You = the venue owner (a related model). You let a route operator place their machines in your shop and take a cut. Zero capital, but you lose control and most of the profit — only worth it if claw machines are a side attraction, not the core.
Revenue splits are usually computed on gross collections, not net after prizes, because the location can't see your prize cost. Cashless readers (Vol 4 · ch 4) make these splits transparent and dispute-free — a big reason to go cashless.
Side-by-side
| Factor | Buy | Lease/rent | Revenue-share |
|---|---|---|---|
| Upfront capital | High | Low | None |
| Long-term margin | Best (own it) | Moderate | Lowest (split) |
| Control (win rate, prizes) | Full | Some | Little |
| Maintenance burden | You | Lessor | Operator |
| Market risk | You own the risk | Shared | Operator carries more |
| Best for | Committed operator | Testing/lower capital | Adding machines without owning |
The trap that catches beginners
Leasing or revenue-sharing looks appealing because it needs little capital — but for a shop where claw machines are the whole business, giving away 50% of revenue (or paying lease margins) for years means you never build real margin or equity. If you're building the business around claw machines, buying (even just 4–6 core machines) is usually the better long-term play. Leasing/revenue-share makes more sense when you're testing a location or adding a few extra machines without more capital.
So which for YOUR first shop?
- Default recommendation: buy your core machines (ideally used/refurbished to keep capex low — Chapter 3) once you're committed to the location. You keep full margin and build an asset.
- If you're capital-constrained or unsure the location works: consider leasing a few machines first as a low-risk test, and switch to buying once the shop proves itself.
- Revenue-sharing is only a fit if you want claw machines as a side attraction in a larger venue, not your core business — or if a route operator can fill your space cheaply while you focus elsewhere.
Summary
You can buy, lease, or revenue-share your machines. Buying gives the best long-term margin and control and is the right default for a shop built around claw machines — especially with cost-effective used/refurbished units. Leasing or revenue-sharing suits testing, low capital, or side-attraction setups but costs far more in the long run and gives up control. Avoid the "cheap to start" trap that gives away half your revenue for years.
Checklist
- ☐ Decided between buy / lease / revenue-share for your situation.
- ☐ If buying, planned used/refurbished machines to manage capex.
- ☐ If capital-constrained, considered leasing a few machines as a limited test.
- ☐ Avoided giving away margin unnecessarily via long-term leases/revenue-shares.
- ☐ Computed whether your revenue can cover lease payments in slow months.
Looking ahead
Decided to buy or lease? Chapter 3 tells you exactly where to source machines and what new vs used actually goes for.