Placement economics: sell or lease
Lifetime value of a system sold or leased, payback.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: placement economics: sell or lease.Updated 2 October 2026
Part of healthcare financial models, with the models, labs and guides around it.
What it does
The decision behind every placement, reduced to one system. Sold, the company books the price less the cost at once and then earns consumables and service for the system’s life. Leased, it pays the cost to build at once and earns consumables and lease payments instead. Discounting both over the useful life gives each a lifetime value; solving for the lease payment that equalises them shows how far the actual payment falls short, and the payback says how long a leased system ties up cash.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, row 26: Useful life of a system (years)
- Assumptions, row 34: Discount rate for a placement decision
- Placement, rows 5–9: Procedures a year on one system (FY1 utilisation), Instruments and accessories gross profit a year ($m), Service gross profit a year on a sold system ($m), Lease payment less servicing a year on a leased system ($m)…
- Placement, rows 12–19: Sold: price less cost, received at placement ($m), Sold: lifetime value ($m), Leased: the cost to build, paid at placement ($m), Leased: lifetime value ($m)…
What a reviewer looks for
- Comparing a lease with a sale on revenue rather than cash value.
- Leaving the consumables out of the comparison.
- Judging a lease against a sale that would never have happened.
Learn it, then build it
Vocabulary: Installed Base, Razor-and-Blade Model.