Here’s a closer look at how a turnkey solution works and when you may want to go with it instead of a custom option.
Definition and Examples of a Turnkey Solution
A turnkey solution (sometimes spelled “turn-key” or “turn key”) is any product or service that’s complete and ready for use. Turnkey solutions are common in real estate and business, but can refer to any ready-use product or process. For example, a South Carolina university developed online gardening courses and hands-on workshops for educators, including a “Turn Key School Garden Kit.” The kit provides teachers with everything needed to create a school garden and is delivered to the school. In the past, the New York State Education Department also has offered teachers and principals math and language-arts “turnkey kits.”
How Does a Turnkey Solution Work?
“Turnkey solution” sounds like fancy lingo, but it boils down to this: If something is pre-packed and ready to go, it could be marketed as a turnkey solution. If you need to do something before it’s usable, it’s not. For example, if you suddenly got a job cross-country with a next-week start date, you need a place to stay right away. You could temporarily rent a furnished apartment as a turnkey solution. The furnished apartment would come with everything you need. All you’d need to do is bring your clothes, buy some groceries, and you’d be set. On the other hand, a furnished apartment could have higher rent. The furniture and decorations may not reflect your style. These would be trade-offs you’d have to make. Many houses have issues, and a cheaper fixer-upper might need an investment of cash and time, but could end up reflecting your style and taste; or you could pay more for a turnkey solution, with stainless-steel appliances, a bright, remodeled basement, and updated bathroom and kitchen.
Examples of Turnkey Solutions in Finance
Turnkey solutions exist in the world of personal and business finance. You could spend time using individual stocks and bonds to construct the perfect portfolio. But some investment firms offer “turnkey” investments with preselected portfolios based on your risk tolerance. Turnkey rental investments are properties that a third party has rehabilitated and rented to a tenant, and will manage on an ongoing basis. In most cases, the investor buys the property while the third party juggles the more challenging work. This allows the investor to buy and hold the turnkey investment from afar.
Is a Turnkey Solution Worth It?
Whether you realize it or not, you’re often choosing between a turnkey solution and an alternative. Do a quick cost/benefit analysis to see if a turnkey solution is worth the cost. For example, should you:
Rent a furnished or unfurnished apartment?Buy a turnkey home or a fixer-upper?Start a restaurant from scratch or buy a turnkey franchise?Build a computer or buy one that’s ready to use?Hire a financial planner or use a turnkey portfolio?
If you’re short on time or lack expertise, a turnkey solution may be a good option. But if you can do it yourself or want a customized solution, you may be better off with something else.
Pros and Cons of a Turnkey Solution
Pros Explained
Hassle-free: The biggest benefit of a turnkey solution is that it saves you a lot of time. You don’t have to build something or hire someone because the solution is ready to go.Created by experts: Professionals creating turnkey solutions typically understand what the average consumer needs.Potentially less expensive than a customized solution: You could pay less for a turnkey solution than a professionally designed custom solution.
Cons Explained
No customization: Turnkey solutions can be generic and one-size-fits-all, so you might miss out on an opportunity to reflect your unique needs and taste.Could have wrong features: A turnkey solution won’t be 100% perfect, and could have an unnecessary feature or lack a feature you desire.Can be more expensive than DIYing it: In general, you’ll pay more for the convenience of a turnkey solution than if you did it yourself.
Alternatives to a Turnkey Solution
If you think a turnkey solution isn’t right for you, you have two main alternatives.
Do It Yourself
If you have the time and talent to create the thing you’re looking for, you could always DIY. Despite sinking more time and energy into the project, you’ll finish with something made to fit your needs.
Get a Custom Solution
If you don’t have the time or skill to do it yourself, the other option is to hire a company that can create a custom solution for you. Using the fixer-upper as an example, if you want a house reflecting your artistic flair but don’t know how to do it, you can hire a professional to renovate it into your dream home. You’ll pay a premium, but it’ll be uniquely yours.
