7d • Pricing
How Do You Determine Initial Pricing?
I’m curious how everyone here determines their initial rental pricing.
For me, I run every potential purchase through a spreadsheet before I buy. It calculates daily/weekly/4-week rates based on my projected cost to keep & fleet life expectancy, and shows how many rentals at each duration I’d need to hit my monthly return goals. Only after that do I check competitor pricing. The only time their numbers matter is if mine come out so far above theirs that it feels unreasonable, or if the utilization required is unrealistic.
As a general rule, I don’t care what my competitors charge. Too many people in this business (and others) set prices based on “market rates” and then wonder why they can’t make money. I get that we are in a somewhat 'commoditized' market, but we can't simply assume the guy down the streets decisions will serve us well.
If your numbers say you need to charge $150/day but the guy down the road is at $100/day, you’ve got two options:
- Rent it at $150 and prove the value to your customer, or
- Skip the purchase and move on to something that makes more sense to your business.
For all we know, that guy down the road is just chasing fast cash and isn’t building a profitable business. Why chase him to the bottom?
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How Do You Determine Initial Pricing?
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