How to Set Your Rate Structure to Competitive Levels

Rental rates have spiraled to new lows over the past several years and we have seen, in the last few months, a flattening of those rates. Time utilization has increased but the rates are holding at low levels, so you ask yourself, "What can I do to get my rental revenue higher."

As an independent rental owner, you might be perplexed over what to do. One of the most frequent situations we see is one in which the independent rental owner is trying to chase the same tower cranes and industrial complexes the big consolidators are going after. However - and I cannot stress this strongly enough - you might not have the right fleet mix for this type of competition and you are forced to buy at a different pricing level than the consolidators. This, in turn, makes it extremely difficult to compete on those types of accounts without significantly lowering your pricing - and this has a great impact on your effort to increase rental revenue for your company.

We strongly recommend to our clients that they analyze their current customer base and determine which kind of accounts they are currently renting to that will give them the best return on their investment. Then, focus your sales team to call on more of these types of accounts.

I know this seems simple, but you have no idea how many of our clients have lost their focus on profitable accounts and focus on the bigger, more competitive accounts - for which they are not prepared.

As companies (small and consolidators) are closing branches, there are plenty of good salesmen looking for jobs. Make sure when you interview that you are recruiting a sales force that fits your culture, your fleet and your acceptable rate structure for the market you serve.

Questions or comments? Contact Mike Farley at mfarley@equipone.net.

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