In 1995, a gallon of milk cost $2.50. Today it averages $4.38 per gallon. Rental equipment is certainly not milk, but over the years, the price of everything rises and falls, and rental rates are no exception. Here are a few of my thoughts and opinions about this important topic.
I have assisted hundreds of rental companies to analyze and adjust their rental rates with very positive results. I often assist rental companies that have never had a comprehensive rental rate analysis and adjustment. So, there can be huge opportunities to receive the return on investment that you deserve. In my professional opinion, most rental companies have not kept pace with ever-increasing costs associated with operating their businesses.
Remember, it isn’t only the increased cost of purchasing the rental equipment that may support changes to rental rates and other fees charged to their customers. There are many other ever-increasing costs, including equipment repair and service costs, shipping the equipment to your company, fuel and vehicles, occupancy, taxes and, of course, the enormous increase in payroll expenses.
When I assist my customers to make changes to their rental, delivery and other charges, it is always a collaborative effort with me working with the owner of the rental company and sometimes with the input of another key individual who has significant customer contact. Combining my expertise of the psychology and science of pricing in rental companies and how to maximize revenue with my customers’ intimate knowledge of their customers and local market is highly effective in developing rates that are appropriate and well deserved.
In my opinion, no two rental companies should be charging the same rates (unless they are branch locations of one company, and even then, there can be differences). Even in the same market areas, there are so many variables that affect rates that there are often significant differences in pricing from one company to the next. Of the many hundreds of individual rental companies I have assisted with this project over the years, the rates have never been the same.
Rental companies that do “across the board” rate increases are making a huge mistake in my opinion. With this practice, one runs the risk of “being too high” on some items and "far too low” on other items, so I highly discourage using this approach. Of course, a “too high” rate can cause the frequency of rent to drop to a level that negates the planned revenue increase from increasing the rental rate. A “too low” rental rate can cause a significant loss of the potential to bring in additional revenue.
I highly recommend having a highly experienced rental business consultant assist with the process of rental rate analysis, adjustment and proper implementation. There is a science behind all three.
Don’t just copy other rental companies’ rates. Don’t compare your rental rates to other rental companies’ pricing in other parts of the country or even in your region. Asking “how much do you get for your______” not only serves no good purpose, but it often can also lead to significant pricing missteps. Again, every rental company should be charging the rates that make the most sense for them.
Your rental company is unique in many ways. Rental rates are very rental company specific. Your market area, your mix of inventory, how you position your company and many other factors are unique.
With the many compelling benefits of analyzing and adjusting your rental rates, delivery fees and other charges, make this one of your company’s priorities.
Milk price for 1995 from TasteOfHome.com. Milk price for 2022 from USDA Retail Milk Prices Report.
