How to Improve Equipment Rental Business Profitability

Jul 1st, 2024

Payment ProcessingEvent & Equipment Rentals

Are you interested in increasing your equipment rental business profitability? The truth is that all business owners want to keep more money in their pockets and expand their target market. The problem is that there isn’t a single way to go about growing your business.

If you’re looking for a place to start, we’ve compiled some tips for both increasing your revenue and cutting costs. After all, a dollar saved is a dollar earned! Think about how you can apply some of these strategies in your business today.

 

Market Research

One of the earliest things you can do to scale your business and improve your equipment rental profitability is scope out the market and get a good feel for what clients will pay for comparable rentals. By digging into competitor analysis, you can more accurately set prices that are fair to your clients while maximizing profits. The goal shouldn’t be to gouge your customers but rather to align your business with the market. 

This is also a great opportunity to observe trends in the industry. Are there new and more popular equipment models that people are requesting? Where is the market headed and what can you do to ensure that you don’t miss the boat? 

Market research is the guide for where, when, and how much you ultimately invest back into the business.

 

Strategic Pricing and Breakeven Points

Setting rates involves more than just settling on a number that seems fair. It's essential to have your finger on the pulse of your breakeven point so you can set strategic rental prices that cover your costs to acquire equipment while setting you up for future purchases.

Take some time to calculate equipment rental rates, as this is the biggest deciding factor in how well your business succeeds in a crowded landscape. Consider all of the elements that factor into the cost of equipment: fuel, insurance, storage, and lifespan. 

From here, you can figure out the total cost to your bottom line and divide it by the number of months that you expect your equipment to last. The goal should be to break even on each investment and turn a small profit after the first year of renting.

 

Proactive, Preventive Maintenance

It would be nice if you could continuously rent out your equipment without a second thought, but that unfortunately isn’t the case. Preventive maintenance helps ensure that your equipment is service-ready and stays functional for longer. Maintenance does cost you both money and time, but it’s worth it when you can get more years out of your investment. 

And while equipment longevity is certainly a major factor, it's not the only reason to consider preventive maintenance. By keeping up with the care and maintenance of your rental, you minimize the risk of breakdowns at inopportune moments such as when a customer is in the middle of a major project. A breakdown can upset a customer, leave a bad taste in their mouth, and ultimately result in a refund or chargeback.

Worse still, when equipment breaks down, it’s out of commission until it’s repaired or replaced. That could mean days, weeks, or even months without that asset available to generate rental income. 

In short, proactive equipment maintenance helps increase equipment rental business profitability by extending asset longevity, reducing equipment downtime, and improving customer satisfaction.

 

Long-Term Employee Retention

If you need a quick way to cut costs, you might consider lower wages as a short-term solution that might help you line your bank account. The problem is that this won’t pay off in the long run.

To start, lower-paid employees aren’t always cost-effective. More experienced workers demand a higher wage but tend to work faster and make fewer mistakes. Skilled workers can essentially pay for themselves, while unskilled or unmotivated workers could harm more than help.

Plus, consider the long-term consequences of losing skilled employees who weren’t offered enough to stay. Employee turnover can be incredibly expensive – in both time and money! It can be substantially more costly to advertise that position, recruit fresh talent, and take time out of your hectic schedule to train a new employee. 

Business operations are bound to slow down in the interim, leading to a heavier workload for the rest of your team. In this way, employee turnover can ultimately impact your entire business.

 

Mutually Beneficial Partnerships

One of the best things you can do to improve equipment rental business profitability is to forge relationships with skilled craftspeople and other trades that complement the services and products that you offer. Having reliable, mutually beneficial relationships with other professionals both in your industry and outside of it can give you the contacts, resources, and support you need to thrive. 

Think about what it would be like to know that you had a cleaner or a supplier on speed dial when the need arose. You don’t have to worry about taking a risk on potentially unreliable service, since you know and trust that vendor. You may even be able to secure a discounted price when you leverage those relationships. 

This saves your bottom line and provides a source of revenue to other small businesses – a win-win for everyone.

 

Cost-Effective Payment Processor

Many equipment rental businesses don’t put a lot of thought into how they accept payments. They often go with solutions like Stripe as their payment processor, but it may not be ideal.

In addition to their high fees, Stripe can limit your control over your finances since they will be the Merchant of Record (MOR) for your business. As a general-use payment processor, they won’t be able to help you with rental-specific advice and suggestions. If you need customer service, you may have a hard time getting a hold of their customer support team.

Choosing a payment processor that is tailor-made for the rental industry can reduce your overall costs. Ascent offers competitive rates, interchange pricing, compliant surcharging, and net billing – all of which help you keep more money in your pocket.

This means you can pass the savings on to your customers, making you more competitive in your local market and securing a bigger share of the rental industry. You could reinvest back into the business by buying more equipment and expanding your offerings.

 

Secure, Reliable Payment Processing for Equipment Rentals 

With more than two decades of experience offering payment processing solutions in the rental space, you can rest easy knowing that you’re in good hands with Ascent Payment Solutions. Our solutions are easy to implement, flexible, and come with 24/7 US-based support. 

We’re more than a payment processor – we’re your partner, and we’re here to help your business thrive! Reach out to us today to learn more about our payment processing options!