IPv4 Leasing vs Purchasing: Cost Analysis

Organizations needing IPv4 addresses face a critical financial decision: lease or purchase? With IPv4 addresses trading at $35-$55 each and lease rates around $0.25-$0.55 per IP per month, the choice significantly impacts budgets, cash flow, and long-term costs. This comprehensive analysis examines all financial aspects to help you make the optimal decision for your organization.

Current Market Prices (2025)

IPv4 Purchase Prices

IPv4 address purchase prices have stabilized after years of volatility, though regional and block-specific variations persist:

Global Average Prices:

• Small Blocks (/24 to /22): $45-$55 per IP
• Medium Blocks (/21 to /20): $40-$50 per IP
• Large Blocks (/19 to /16): $35-$45 per IP

Regional Pricing Variations:

APNIC Region (Asia-Pacific):

• Highest global prices: $50-$55 per IP
• Driven by strong demand in China, India, Southeast Asia
• Limited supply due to rapid regional growth
• Premium for clean, well-maintained blocks

ARIN Region (North America):

• Moderate-high prices: $45-$50 per IP
• Mature market with established transfer processes
• Strong demand from cloud providers and enterprises
• Justified need requirements add transaction complexity

RIPE Region (Europe, Middle East, Central Asia):

• Moderate prices: $40-$45 per IP
• Most liquid market due to no-needs-assessment policy
• Large volumes traded regularly
• Competitive pricing from multiple sellers

LACNIC/AFRINIC Regions:

• Generally $35-$40 per IP where available
• Smaller markets with less liquidity
• Limited availability of large blocks

Block-Specific Pricing Examples (using ARIN region average of $47.50/IP):

Block Size	IP Count	Total Purchase Cost
/24	256	$12,160
/23	512	$24,320
/22	1,024	$48,640
/21	2,048	$97,280
/20	4,096	$194,560
/19	8,192	$389,120
/18	16,384	$778,240
/17	32,768	$1,556,480
/16	65,536	$3,112,960

IPv4 Lease Prices

IPv4 leasing offers more predictable pricing with less regional variation:

Global Average Lease Rates:

• Standard Rates: $0.40-$0.47 per IP per month
• Budget Providers: $0.25-$0.35 per IP per month (may have reputation risks)
• Premium Providers: $0.50-$0.55 per IP per month (verified clean addresses)

Regional Lease Variations:

• APNIC Region: $0.50-$0.65 per IP per month (premium for Asia-Pacific)
• RIPE/ARIN Regions: $0.38-$0.45 per IP per month
• LACNIC/AFRINIC: $0.30-$0.40 per IP per month

Block-Specific Monthly Lease Costs (using average of $0.43/IP/month):

Block Size	IP Count	Monthly Cost	Annual Cost
/24	256	$110	$1,320
/23	512	$220	$2,640
/22	1,024	$440	$5,280
/21	2,048	$881	$10,572
/20	4,096	$1,761	$21,144
/19	8,192	$3,522	$42,288
/18	16,384	$7,045	$84,576
/17	32,768	$14,090	$169,152
/16	65,536	$28,180	$338,304

Volume Discounts: Many lessors offer discounts for larger blocks or longer-term commitments:

• 5-10% discount for annual pre-payment
• 10-15% discount for 2-3 year commitments
• 15-20% discount for blocks larger than /18
• Negotiable rates for very large deployments (/16 or larger)

Break-Even Analysis

Understanding when leasing costs equal purchase costs is fundamental to the decision:

Basic Break-Even Calculation

Formula:

Break-even period (months) = Purchase Price per IP ÷ Monthly Lease Cost per IP

Standard Scenario (ARIN region):

• Purchase price: $47.50 per IP
• Lease cost: $0.43 per IP per month
• Break-even: $47.50 ÷ $0.43 = 110.5 months (9.2 years)

Conservative Scenario (lower purchase price, higher lease cost):

• Purchase price: $40 per IP
• Lease cost: $0.50 per IP per month
• Break-even: $40 ÷ $0.50 = 80 months (6.7 years)

Optimistic Scenario (higher purchase price, lower lease cost):

• Purchase price: $55 per IP
• Lease cost: $0.35 per IP per month
• Break-even: $55 ÷ $0.35 = 157 months (13.1 years)

Break-Even Table by Region:

Region	Avg Purchase Price	Avg Lease Price/Month	Break-Even Period
APNIC	$52.50	$0.57	92 months (7.7 years)
ARIN	$47.50	$0.43	110 months (9.2 years)
RIPE	$42.50	$0.42	101 months (8.4 years)
LACNIC	$37.50	$0.35	107 months (8.9 years)

Additional Cost Factors

The basic break-even calculation doesn't account for several important cost factors:

Purchase Additional Costs:

1. Transfer Fees: $500-$3,000 per transaction (RIR and broker fees)
2. Legal and Documentation: $1,000-$5,000 for contract review and documentation
3. RIR Membership (if required): $1,400-$2,500 annually (RIPE LIR membership)
4. Opportunity Cost: Capital tied up in IP addresses instead of earning returns
5. Management Overhead: Staff time for RIR communications, registration updates
6. Depreciation Risk: IPv4 values may decrease as IPv6 adoption accelerates

Lease Additional Costs:

1. Setup Fees: $0-$500 (some lessors charge initial setup)
2. Technical Support: Often included, but premium support may cost extra
3. Address Replacement: If addresses become blacklisted (reputation-dependent)
4. Early Termination: Penalties if breaking multi-year agreements

Adjusted Break-Even Analysis

Example: /22 Block (1,024 IPs)

Purchase Total Costs:

• IP addresses: 1,024 × $47.50 = $48,640
• Transfer fees: $2,000
• Legal documentation: $2,500
• Total initial: $53,140
• Annual RIR fees: $1,400
• Five-year total: $53,140 + ($1,400 × 5) = $60,140

Lease Total Costs:

• Monthly: 1,024 × $0.43 = $440
• Setup fee: $200
• Five-year total: ($440 × 60) + $200 = $26,600

Adjusted Comparison:

• Purchase 5-year cost: $60,140
• Lease 5-year cost: $26,600
• Lease savings over 5 years: $33,540 (56% less expensive)

Adjusted Break-Even: Including additional costs, break-even extends to approximately 11-12 years instead of 9.2 years.

Detailed Cost Scenarios

Scenario 1: Small Business/Startup (/24 Block)

Profile:

• Small hosting company or SaaS startup
• Needs: 256 IP addresses (/24 block)
• Uncertain growth trajectory
• Limited capital

Purchase Analysis:

• IP cost: 256 × $47.50 = $12,160
• Transfer fees: $1,500
• Total initial: $13,660
• Annual fees: $500
• 3-year total: $15,160

Lease Analysis:

• Monthly: 256 × $0.43 = $110
• 3-year total: $110 × 36 = $3,960

Recommendation: Lease

• 74% cost savings over 3 years
• Preserves $12,000+ capital for business development
• Flexibility if business needs change or fail
• Can scale up or down easily

Scenario 2: Growing Hosting Provider (/22 Block)

Profile:

• Established hosting company expanding
• Needs: 1,024 IP addresses (/22 block)
• Steady growth expected
• Moderate capital availability

Purchase Analysis:

• IP cost: 1,024 × $47.50 = $48,640
• Transfer fees: $2,000
• Total initial: $50,640
• Annual fees: $1,000
• 5-year total: $55,640

Lease Analysis:

• Monthly: 1,024 × $0.43 = $440
• 5-year total: $440 × 60 = $26,400

Recommendation: Lease initially, consider purchase after year 3-4

• Lease saves $29,240 over 5 years
• Use saved capital for infrastructure and customer acquisition
• Re-evaluate at year 3-4 when needs are clearer
• Consider purchase if strong growth confirms long-term need

Scenario 3: Mid-Size ISP (/20 Block)

Profile:

• Regional ISP with established customer base
• Needs: 4,096 IP addresses (/20 block)
• Stable, long-term operation expected
• Sufficient capital available

Purchase Analysis:

• IP cost: 4,096 × $47.50 = $194,560
• Transfer fees: $2,500
• Legal: $3,000
• Total initial: $200,060
• Annual fees: $1,500
• 10-year total: $215,060

Lease Analysis:

• Monthly: 4,096 × $0.43 = $1,761
• 10-year total: $1,761 × 120 = $211,320

Recommendation: Purchase or long-term lease with purchase option

• Costs nearly equal at 10 years (break-even)
• Purchase provides asset ownership and potential resale value
• Long-term lease with purchase option offers flexibility
• Consider financing options if preserving cash flow is important

Scenario 4: Enterprise Cloud Migration (/21 Block, 24 months)

Profile:

• Enterprise migrating to cloud over 24 months
• Needs: 2,048 IP addresses (/21 block) during migration
• Temporary requirement (migrating to cloud provider IPs after)
• Capital available but CFO prefers operational expense

Purchase Analysis:

• IP cost: 2,048 × $47.50 = $97,280
• Transfer fees: $2,000
• Total initial: $99,280
• 2-year total: $99,280
• Resale after 2 years: ~$85,000 (assuming 10% market decrease)
• Net cost: $14,280 (plus effort to resell)

Lease Analysis:

• Monthly: 2,048 × $0.43 = $881
• 2-year total: $881 × 24 = $21,144

Recommendation: Lease

• No capital outlay required
• Operational expense easier to budget
• No resale complications or market risk
• Can terminate immediately when migration completes
• Even accounting for resale value, leasing is simpler

Scenario 5: Large Data Center (/18 Block)

Profile:

• Major data center provider
• Needs: 16,384 IP addresses (/18 block)
• Long-term operation (10+ years)
• Capital available, seeking lowest total cost

Purchase Analysis:

• IP cost: 16,384 × $45 = $737,280 (volume discount)
• Transfer fees: $3,000
• Legal: $5,000
• Total initial: $745,280
• Annual fees: $2,000
• 10-year total: $765,280
• 15-year total: $775,280

Lease Analysis:

• Monthly: 16,384 × $0.38 = $6,226 (volume discount)
• 10-year total: $6,226 × 120 = $747,120
• 15-year total: $6,226 × 180 = $1,120,680

Recommendation: Purchase

• Costs equal around 10 years
• Purchase cheaper for 15+ year horizon
• Ownership provides asset on balance sheet
• Potential appreciation or steady resale value
• Can lease excess capacity to others for revenue

Cash Flow Analysis

Beyond total cost, cash flow impacts are critical:

Initial Capital Requirements

Purchase:

• Large upfront payment required
• Ties up capital that could fund other initiatives
• May require financing or capital approval
• Impacts quarterly/annual budgets significantly

Lease:

• Minimal or no upfront payment
• Small monthly operational expenses
• Easy to budget and forecast
• Preserves capital for core business needs

Cash Flow Comparison - /22 Block:

Timeframe	Purchase Cumulative Cost	Lease Cumulative Cost	Cash Difference
Month 0	$50,640	$440	$50,200
Month 6	$51,140	$2,640	$48,500
Month 12	$51,640	$5,280	$46,360
Month 24	$52,640	$10,560	$42,080
Month 36	$53,640	$15,840	$37,800
Month 48	$54,640	$21,120	$33,520
Month 60	$55,640	$26,400	$29,240

Operational vs. Capital Expense

Accounting Treatment Differences:

Purchase (CapEx):

• Capitalized as intangible asset on balance sheet
• Depreciated over useful life (typically 5-15 years)
• Requires capital expenditure approval process
• May face budget constraints or approval thresholds
• Impacts debt covenants and financial ratios

Lease (OpEx):

• Treated as operating expense
• Fully deductible in year incurred
• Easier approval process (operational budgets)
• Doesn't impact asset/liability balances
• More predictable budgeting

Tax Implications: Consult with your tax advisor, as treatment varies by jurisdiction, but generally:

• Lease payments fully deductible as business expenses
• Purchased IPs depreciated over time (slower deduction)
• Potential differences in tax benefits depending on location

ROI and Opportunity Cost

Opportunity Cost of Capital:

If your organization can achieve 10% annual return on invested capital:

$50,000 invested in IPv4 purchase could instead earn:

• Year 1: $5,000
• Year 2: $5,500 (compounding)
• Year 3: $6,050
• Year 4: $6,655
• Year 5: $7,321
• 5-year total return: $30,526

Leasing instead frees capital to potentially earn $30,526 over 5 years, while lease costs only $26,400. Net benefit: $4,126 plus strategic flexibility.

IRR Analysis: For organizations with high capital costs or exceptional growth opportunities, the Internal Rate of Return (IRR) from deploying capital elsewhere may significantly favor leasing even at longer time horizons.

Non-Financial Factors

Several non-financial considerations influence the lease vs. purchase decision:

Flexibility and Scalability

Leasing Advantages:

• Scale up quickly during growth periods
• Scale down when needs decrease
• No sunk costs if business changes
• Easy to test different block sizes
• Minimal commitment for experimental projects

Purchase Advantages:

• Complete control over addresses
• No risk of lease termination
• Can sublease to others if desired (where permitted)
• No ongoing vendor relationships required

Risk Considerations

Leasing Risks:

• Lessor business failure or exit from market
• Price increases at renewal
• Potential service disruptions
• Dependence on lessor's RIR compliance
• Address reputation issues from previous users

Purchase Risks:

• IPv4 value depreciation as IPv6 adoption grows
• Capital tied up in potentially declining asset
• RIR policy changes affecting ownership
• Difficulty selling if needs change
• Market volatility affecting resale value

Strategic Considerations

Lease for:

• Uncertain business outlook
• Short-to-medium term projects (< 5 years)
• Testing and proof-of-concept phases
• Preserving capital for core investments
• Organizations prioritizing flexibility

Purchase for:

• Long-term infrastructure (10+ years)
• Core business assets
• Strategic IP portfolio building
• Organizations with available capital
• Desire for asset ownership and control

IPv6 Transition Planning

Impact on Decision:

If your organization has aggressive IPv6 adoption plans:

• Lease IPv4: Avoid capital commitment to addresses you'll phase out
• Maintain flexibility to reduce IPv4 footprint over time
• Align IPv4 costs with actual usage as you transition

If IPv6 transition is distant or uncertain:

• Consider purchase: Long-term IPv4 dependence favors ownership
• Break-even timeline more likely to be reached
• Stable long-term costs

Decision Framework

Use this framework to determine the best option for your organization:

Step 1: Define Your Time Horizon

Less than 3 years: Strong preference for leasing

• Cost savings are substantial
• No risk of reaching break-even
• Maximum flexibility

3-5 years: Moderate preference for leasing

• Cost savings still significant
• Flexibility valuable
• Consider long-term lease with purchase option

5-8 years: Neutral to slight purchase preference

• Approaching break-even period
• Consider financial position and flexibility needs
• Hybrid approach possible (lease some, buy some)

8+ years: Preference for purchasing

• Likely to exceed break-even
• Ownership benefits accumulate
• Asset has potential value

Step 2: Assess Capital Availability

Limited Capital (startup, high-growth phase):

• Strong preference for leasing
• Preserve capital for core business
• Operational expense easier to manage

Moderate Capital (established business):

• Evaluate based on opportunity cost
• Compare expected returns on capital to break-even
• Consider strategic priorities

Ample Capital (large enterprise, mature business):

• Evaluate purely on total cost
• Consider balance sheet impact
• Asset accumulation may be desirable

Step 3: Evaluate Demand Certainty

Uncertain or Variable Demand:

• Lease for flexibility
• Can adjust size easily
• No risk of over-purchasing

Growing but Predictable Demand:

• Start with lease, purchase later
• Validate growth trajectory
• Purchase once stable

Stable, Long-Term Demand:

• Consider purchase
• Costs predictable
• Ownership benefits maximize

Step 4: Consider Risk Tolerance

Risk-Averse:

• Purchase for control
• No vendor dependencies
• Stable long-term costs

Risk-Tolerant:

• Lease for flexibility
• Comfortable with market changes
• Focus on preserving capital

Step 5: Account for Strategic Goals

Questions to consider:

• How important is balance sheet management?
• Do you prefer CapEx or OpEx treatment?
• How critical are these IPs to core business?
• What are your IPv6 transition plans?
• Do you anticipate business model changes?

Hybrid Approaches

Many organizations benefit from combining leasing and purchasing:

Core + Flex Strategy

Approach:

• Purchase core, baseline IP requirements
• Lease additional capacity for growth, peaks, or temporary needs

Example:

• Mid-size hosting provider purchases /22 (1,024 IPs) for stable customer base
• Leases additional /23 or /22 for new customer onboarding and growth
• Scales lease up or down based on demand
• Purchases additional blocks once sustained growth is confirmed

Benefits:

• Optimizes costs by owning long-term needs
• Maintains flexibility for variable demand
• Reduces risk of over-purchasing
• Balances capital efficiency with ownership benefits

Geographic Diversification

Approach:

• Purchase IPs in primary operating region
• Lease IPs in secondary or test markets

Example:

• European company purchases RIPE-region IPs for main operations
• Leases ARIN or APNIC IPs for North American/Asian expansion testing
• Commits to purchase in new regions once market viability is proven

Benefits:

• Reduces risk when entering new markets
• Maintains flexibility in uncertain regions
• Optimizes capital allocation

Time-Phased Acquisition

Approach:

• Lease initially to establish operations
• Purchase after validation period
• Apply some lease payments toward purchase (lease-to-own)

Example:

• Startup leases /23 for first 2 years
• Converts to purchase at year 2 with credit for lease payments
• Lessor credits 50% of lease payments toward purchase price
• Reduces total acquisition cost while maintaining initial flexibility

Benefits:

• Validates business model before major investment
• Provides path to ownership
• Reduces total cost compared to lease-only or purchase-only

Making Your Decision

Recommendation Summary

Choose Leasing If:

• Need is less than 5 years
• Capital is limited or needed for other priorities
• Demand is uncertain or highly variable
• Organization is in startup or high-growth phase
• IPv6 transition plans may reduce IPv4 needs
• Flexibility and scalability are priorities
• Prefer operational expense treatment

Choose Purchasing If:

• Need is 8+ years or indefinite
• Capital is available and opportunity cost is low
• Demand is stable and predictable
• Organization has mature, established operations
• IPv6 transition is distant or uncertain
• Asset ownership aligns with strategic goals
• Prefer capital expense treatment and balance sheet asset

Consider Hybrid If:

• Mix of stable and variable demand
• Operating in multiple geographic regions
• Want to balance cost optimization with flexibility
• Seeking to validate before committing fully
• Complex infrastructure with varied criticality levels

Financial Tools and Calculators

Several online calculators can help with your specific analysis:

• Brander Group IPv4 Cost Calculator
• IPv4Connect Lease vs. Buy Calculator
• Custom spreadsheet modeling your specific scenarios

Via-Registry also offers personalized cost analysis for organizations evaluating options. Contact our team for a customized financial comparison based on your requirements.

How Via-Registry Helps

Via-Registry offers both IPv4 leasing and purchasing solutions, providing unbiased guidance:

Leasing Services:

• Competitive rates starting at $0.40/IP/month
• Flexible terms from monthly to multi-year
• Volume discounts for large blocks
• Lease-to-own options available

Purchase Assistance:

• Access to quality IPv4 blocks for purchase
• Competitive pricing across all regions
• Complete inter-RIR transfer support
• RIR compliance guaranteed

Financial Consulting:

• Personalized cost analysis for your situation
• Break-even modeling with your specific parameters
• Hybrid strategy development
• Financing option referrals

Get Started:

• IPv4 Leasing Service
• IPv4 Transfer Service
• Contact for Personalized Analysis

Summary

The lease vs. purchase decision for IPv4 addresses involves multiple financial and strategic factors:

Key Financial Takeaways:

• Break-even typically occurs at 8-10 years
• Leasing saves 50-75% of costs for periods under 5 years
• Cash flow impact strongly favors leasing for capital-constrained organizations
• Additional costs (transfer fees, RIR memberships) extend break-even periods
• Opportunity cost of capital can make leasing attractive even at longer horizons

Decision Framework:

• Time horizon is the primary determinant
• Capital availability and opportunity cost matter significantly
• Demand certainty affects flexibility value
• Risk tolerance influences preference for control vs. flexibility
• Strategic considerations (IPv6 transition, business model) impact long-term value

Hybrid Strategies:

• Often provide optimal balance of cost and flexibility
• Core + flex approach suits many mid-size organizations
• Geographic and time-phased strategies reduce risk

Bottom Line: For most organizations with needs under 5 years, leasing delivers superior financial outcomes. For established organizations with stable, long-term needs (8+ years), purchasing may be more economical. When in doubt, starting with leasing and converting to purchase later often provides the best balance of flexibility and cost optimization.

For a complete understanding of IP leasing fundamentals, read our IP Address Leasing: Complete Guide.