Bid to Win With Accurate Costs

by Garry Bartecki
Created: May 1, 2005

Take advantage of outside sources when calculating equipment rates.

Contractors can learn a lot by using rental rates as a benchmark for estimating equipment costs, particularly on short--term projects. Following is an example of how costs are calculated into the rental rates:

Based on a 30% to 40% gross profit, costs are in a range of 60% to 70%.

Given a $1,000 per month rental rate, the starting point for costs is $600 to $700 per month or $21 to $25 per day.

Costs would be approximately $25 to $30 per day for a weekly rental or $54 to $63 daily.

More of the owning and operating costs of equipment are built into short--term rates. This enables rental centers to effectively cover the expenses and downtime associated with moving equipment from site to site.