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A Beginners Guide To Rental Rates

Rental Rates

One of the rental industries’ biggest appeals is the so-called infinite return on investment. You rent something out and you get to repeat this process as many times as you want until you have easily made back the original money spent to purchase the item. Now as this may seem a little too good to be true, it is, but with proper rental rates, you can get pretty close. 

What to consider when choosing rental rates

Direct Transactional Cost

  • Cleaning
    • These are the costs you need to consider for cleaning the actual item in between rentals. Especially with the recent pandemic, cleaning is more important than ever and items you once thought required little care in the cleaning department, now do.
  • Inspection
    • An inspection may take a few seconds, but it’s very important to look for any damage done to the item while it was out and about. Not only could this prevent further damage but also ensures you aren’t giving your customer a chipped glass. 
  • Storage
    • Storage is essential and varies greatly depending on the size or stackability of the item. Where you can stack linen, you can’t stack a Bobcat. This is where rental rates may affect items of different sizes and shapes a little differently. Storage includes the space itself, lights, temperature, and all that lame stuff that adds up quickly. 
  • Maintenance
    • After a long period of constant use, your items will begin to weaken and require maintenance. While some may consider maintenance to a table a lot differently from a forklift, this needs to be considered within the rates.
  • Skilled labor
  • Handling frequency

Indirect Transactional Costs

  • Rent
    • This is rent on storage and office space that leading rental companies have to pay. These are costs that you don’t need to consider when operating a RuckifyStore, this is the competitive edge and competitive pricing that makes you ideal in the eyes of a renter.
  • Wages
    • Much like rent, the cost of wages is not as substantial as a fully functional rental operation. While your time is valuable, it’s the only time that you need to consider in the rental rates. 
  • Overhead = 30% — 50%

Utilization Potential

  • seasonal / frequency
    • BBQ vs 8’ table. Some items will be popular year-round and some items will only have seasonal value. Seasonal items need to generate enough money to survive the lull of off season, while year-round items can be cheaper as they have more potential to be rented. 

Life Of Item

  • Durable
    • Obviously, the durability of the item will play a big role in how infinite your return on investment can be. Better quality typically comes at a higher price but will last a lot longer and inevitably provide a higher return. Different items also come into consideration as a Bobcat can last decades, while white linen can only survive a handful of rentals. 
  • Table vs linen
    • Linen is not strong in the sense that it will survive wear and tear like a table would. It can be easily ripped or stained and therefore you need to assume a shorter life span. This is why the rental rates of linen is often a lot higher than a sturdy table. 

Here are some rental rates examples for you to consider

Wine Glass

Cost is $1 and rents for $.45 = 2 rentals to break even-ish

  • 30% transaction cost (cleaning / counting / inspecting)
  • High utilization / year around / 30 bookings per year
  • Short lifespan — 24 rental lifespan

Lifetime Revenue = $10.80

Direct Transaction cost = $3.24

Cost to buy = $1.00

Lifetime cash flow = $6.56

Remember that wine glasses are typically rented in the dozens, so this profit margin can be greatly increased by quantity in your rental rates. 

wine glass rental rates

Martini Glass

Cost is $1 and rents for $.70 cents = 1.3 rentals to break even 

  • 30% transaction cost (cleaning / counting / inspecting)
  • Low utilization / specialty / 4 bookings per year
  • Short lifespan — 6 rentals lifespan

Lifetime Revenue = $4.20

Direct Transaction cost = $1.26

Cost to buy = $1.00

Lifetime cash flow = $1.94

The short lifespan of a martini glass, the original rental rates need to be considerably higher. Now, while it is clear that wine glasses can generate a significant amount more money, the reason event rental companies provide them is so customers have access to full service from one company. When it comes to Ruckify you have the unique opportunity to specialize in whatever items you want. You can simply have a thousand wine glasses and no martini glasses.

martini glass rental rates

Rental Quality 6’ Table

Cost $110.00 and rents for $6.00 = 18 rentals to break even

  • Low 5% transaction cost (storage & short term)
  • High utilization / year around / 15 bookings per year
  • Long lifespan — 10 years of rentals

Lifetime Revenue = $900

Direct Transaction Cost = $54.00

Cost to buy = $110.00

Lifetime Cash flow = $736.00

ruckify table

Low Quality 6’ Table

Cost $60.00 and rents for $6.00 = 10 rentals to break even

  • Low 5% transaction cost (storage & short term)
  • High utilization / year around / 15 bookings per year
  • Long lifespan — 2 years of rentals

Lifetime Revenue = $180

Direct Transaction Cost = $54.00

Cost to buy = $60.00

Lifetime Cash flow = $66.00

What’s important to look at here is the duration of an item’s life makes a huge impact on your return and rental rates. This is why quality items hold the potential to earn a lot more money. Not only will your customers be impressed with the item, but they are way less likely to damage it. 

Bobcat

Cost is $54,000 and rents for $420 day l $1600 week l $4500 month

  • Medium 10% transaction / inspection / ongoing maintenance
  • High utilization / year-round / 10 months or 100 daily bookings per year
  • Long lifespan — 15+ years

Lifetime Cashflow — $630,000

Direct Transaction cost — $63,000

Cost to buy — $54,000

Lifetime Cash flow = $513,000

rental rates with ruckify

This item is particularly popular for rentals because of its high return, though it requires quite an investment. The most important thing to take into account with rental rates is that large rental companies that supply this kind of equipment have very high transactional costs, whereas an individual renting one out on Ruckify, doesn’t experience a fraction of those costs. 

So, while rentals can provide you a high rate of return, it is important to consider every factor when choosing your prices. While a lack of cost will drive down your prices already, it is important to maintain the low price to ensure you keep the competitive edge against big rental companies.

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