Every industry is challenged to develop a fair pricing model for its clients. Pricing event rental equipment based on what a competitor is charging is not a long-term winning model. Pricing must be based on a business model, including operating cost, long-term goals and profit goals.
Rental industry profiles suggest the bottom line for a 100-percent tenting operation should be 15 percent. For a 100-percent event operation (tables, chairs, linen, dance floor, staging .... ) the bottom line should be a minimum 20 percent.
Setting the bottom line profit percentage is the start of a business model. Start with a desired bottom line profit goal, then add projected sales and projected expenses. The result is an operating budget.
Start with a budget including fixed costs and then evaluate the rental revenue required to cover these costs, pay your bills, and generate the desired profit. It will take several iterations to generate a workable budget.
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