Lease vs own
After the first season, who owns the strands? It's the single structural choice on the seasonal line, it's reversible only at the start, and it swings five-year gross profit per customer by roughly 30%.
Identical both ways
One 200 ft roofline. Same crew, same truck, same ladder. Only the revenue schedule and who holds the asset change.
The two schedules, side by side
Own — they buy the lights
| Year | Rate | Revenue | Cost | GP |
|---|---|---|---|---|
| Y1 | $8.00/ft | $1,600 | $520 | $1,080 |
| Y2 | $3.50/ft | $700 | $240 | $460 |
| Y3 | $3.50/ft | $700 | $240 | $460 |
| Y4 | $3.50/ft | $700 | $240 | $460 |
| Y5 | $3.50/ft | $700 | $240 | $460 |
| 5-year | — | $4,400 | $1,480 | $2,920 |
Renewal is labor-only — they already own the strands, we just re-hang them.
Lease — we own the lights
| Year | Rate | Revenue | Cost | GP |
|---|---|---|---|---|
| Y1 | $7.00/ft | $1,400 | $520 | $880 |
| Y2 | $5.00/ft | $1,000 | $268 | $732 |
| Y3 | $5.00/ft | $1,000 | $268 | $732 |
| Y4 | $5.00/ft | $1,000 | $268 | $732 |
| Y5 | $5.00/ft | $1,000 | $268 | $732 |
| 5-year | — | $5,400 | $1,592 | $3,808 |
Renewal carries labor plus a 10% material refresh. We hold the asset.
It all rests on one number: $3.89/ft
The entire bet, stated plainly
Lease breaks even at a $3.89/ft renewal rate. The own-model renewal is $3.50/ft. So the question is whether we can charge 39¢/ft more — $78 a year on a 200 ft house — because we're supplying, storing, maintaining and refreshing the lights rather than just re-hanging theirs. Above that line lease wins. Below it, own wins. Nothing else in this model matters as much.| Lease renewal rate | 5-yr GP | vs own ($2,920) | Verdict |
|---|---|---|---|
| $5.00/ft | $3,808 | +$888 | Lease |
| $4.50/ft | $3,408 | +$488 | Lease |
| $4.00/ft | $3,008 | +$88 | Lease |
| $3.89/ft ← breakeven | $2,920 | even | Coin flip |
| $3.50/ft | $2,608 | −$312 | Own |
| $3.00/ft | $2,208 | −$712 | Own |
The breakeven moves with how hard we discount year one — cut the entry price to win the job and the renewal has to work harder:
| Lease year-one rate | Required renewal to beat own |
|---|---|
| $8.00/ft | $3.64/ft |
| $7.00/ft | $3.89/ft |
| $6.00/ft | $4.14/ft |
| $5.00/ft | $4.39/ft |
Where lease actually earns it
An own-model customer holds $280 of lights any competitor can re-hang — near-zero switching cost. A lease customer holds nothing; the strands are cut to their roofline and sitting in our warehouse.
| Scenario | Own churn | Lease churn | Own GP | Lease GP | Delta |
|---|---|---|---|---|---|
| Base case — lease locks them in | 25% | 10% | $2,023 | $3,146 | +$1,122 (55%) |
| Lease stickiness half as good | 25% | 15% | $2,023 | $2,863 | +$839 (41%) |
| Own churn better than assumed | 20% | 15% | $2,166 | $2,863 | +$696 (32%) |
| No stickiness edge at all | 25% | 25% | $2,023 | $2,381 | +$358 (18%) |
The last row is the one that matters
Even with zero stickiness advantage — lease and own churning at the identical 25% — lease still clears own by +$358 per customer, because the annuity itself is bigger. The retention edge is upside on top of the case, not the case itself. That's what makes this robust to the churn figures being wrong, which they probably are.Steady state — a 100-customer book, held flat
| Model | New sold/yr | Renewals | Churn write-off | Annual GP |
|---|---|---|---|---|
| Own | 25 × $1,080 | 75 × $460 | — | $61,500 |
| Lease | 10 × $880 | 90 × $732 | −$1,960 | $72,720 |
| Difference | — | — | — | +$11,220 (18%) |
The write-off is real and netted off above: a churned lease customer leaves us holding strands cut to their roofline, recoverable at an assumed 30%. Even after that, lease wins — and it does it while selling 15 fewer new jobs a year to hold the same book. That's marketing spend that never appears in gross profit.
Lease is always worse in season one
Same install, lower ticket, because they're not buying an asset. If season one has to fund itself, this is the argument against.
| Season-one customers | Own GP | Lease GP | Year-one gap | Recovered per year from Y2 |
|---|---|---|---|---|
| 25 | $27,000 | $22,000 | −$5,000 | +$6,800 |
| 40 | $43,200 | $35,200 | −$8,000 | +$10,880 |
| 60 | $64,800 | $52,800 | −$12,000 | +$16,320 |
Payback lands inside year two in every case — the annual recovery exceeds the year-one gap. But the gap is real cash in the season we can least afford it, against an inventory order that has to be placed before a single deposit clears.
Don't lease the permanent product
Permanent lighting is a fixture bolted to the customer's house. The analysis inverts completely:
| Structure | GP per job | Cash at install | The problem |
|---|---|---|---|
| Cash sale | $2,250 | $2,250 | None — this is the baseline |
| Third-party financing @ 8% dealer fee | $1,850 | $1,850 | Costs $400, but lender funds us in full and it buys the "low monthly payment" pitch |
| We lease it, 5-year term | needs $1,000/yr just to match | −$2,750 | We front the hardware, and the remedy on non-payment is climbing a non-paying customer's roof |
Not a close call
Financing costs $250–600 per job and pays at install. Leasing costs $2,750 of working capital per job, indefinitely, secured against something we cannot practically repossess. Modelled on a $5,000 ticket at the 45% gross margin assumed in Unit Economics — itself a vendor-sourced figure, so treat the absolute numbers as directional and the ranking as solid.Every assumption behind the above
The weak leg, named
The lease case rests on a $5.00/ft renewal — the top of the sourced $2–5/ft band, and that band is documented as labor-only pricing. There is no Florida market source showing homeowners pay the top of it for a bundled lease. The case survives because breakeven is $3.89/ft, comfortably inside the band — not because $5.00/ft is proven. Worth noting too that the Tampa Angi average of $2.70–6.75/ft sits below our assumed year-one rate either way; both models are priced as a premium offer, not the local median.| Input | Value | Confidence | Basis |
|---|---|---|---|
rooflineFt | 200 | assumed | Representative single-story Pinellas roofline. The plan's typical job. |
materialPerFt | $1.40/ft | sourced | Midpoint of the verified $1.10–1.70/ft C9 wholesale band (Christmas Lights HQ contractor pack, Winterland SKU). |
installPerFt | $1.00/ft | sourced | Installer piece rate, low end of the $0.80–2.00/ft band. |
takedownPerFt | $0.20/ft | sourced | Installer piece rate, takedown. |
ownY1PerFt | $8.00/ft | assumed | Top of the sourced $5–10/ft first-year band. Above the Tampa Angi average — a premium-positioning choice, not the observed local rate. |
ownRenewPerFt | $3.50/ft | assumed | Middle of the sourced $2–5/ft labor-only renewal band. |
leaseY1PerFt | $7.00/ft | assumed | Priced under the own model because the customer is not buying an asset. The discount is the adoption lever. |
leaseRenewPerFt | $5.00/ft | assumed | TOP of the $2–5/ft band — and that band is sourced as LABOR-ONLY pricing. This is the weakest assumption in the model. |
refreshRate | 10% | assumed | Share of material value replaced each season from handling damage and failures. Implies a ~10-year effective strand life. |
salvageRate | 30% | assumed | Recoverable value when a lease customer churns. Strands are cut to their roofline, so most of it is a write-off. |
ownChurn | 25% | assumed | Customer owns $280 of lights any competitor can re-hang. Near-zero switching cost. |
leaseChurn | 10% | assumed | Customer owns nothing. Leaving means starting over with someone else. |
horizonYears | 5 | assumed | Modelling horizon. Not a customer-life estimate. |
Sources: Christmas Lights HQ — contractor wholesale pack pricing · Winterland Inc — verified C9 wholesale SKU · Angi / HomeAdvisor — seasonal install + renewal cost bands · Angi — Tampa holiday light installation cost data · christmaslights.io — installer piece rates
Where this lands
Lease the seasonal line — if we're building a book
Over five years lease clears own by +$888 per customer (30%), and it survives the pessimistic churn case. At a 100-customer book that's +$11,220 a year on the same roofs, while selling 15 fewer new jobs to stand still.
The counter-argument is cash, not economics. Lease costs us real gross profit in season one — the season with an inventory order to fund and no renewal base to lean on. If season one has to pay for itself, own is the model that does that.
Given the division is funded by a roofing company that already owns the trucks, ladders, insurance base and customer list, the year-one hit is the affordable half of this trade. But that's a judgement about Team Armored's balance sheet, not a finding from the model.