EQUIPMENT RENTAL PROFITABILITY GUIDE
How to calculate a rental rate that covers costs and margin
Copying a competitor's price does not tell you whether your machine will recover its investment. Your rate needs to start with your costs and the days you can realistically bill.
1. Calculate annual fixed cost
Add depreciation or finance cost, insurance, storage, licences, administration and a reasonable maintenance reserve. Avoid charging the full purchase price to every year.
2. Estimate billable days
If equipment is available for 220 days and you expect 45% utilisation, you have 99 billable days. Use cautious utilisation based on actual bookings when available.
3. Find the minimum rate
Variable cost may include cleaning, consumables, wear, transport you absorb or fees linked to each rental.
4. Add the target margin
With a minimum rate of €68.61 and a 25% target margin on sales, the target rate is €91.48 per day.
Worked example
| Annual depreciation | €3,000 |
|---|---|
| Insurance, storage and administration | €1,800 |
| Maintenance reserve | €1,200 |
| Annual fixed cost | €6,000 |
| Billable days | 220 × 45% = 99 |
| Variable daily cost | €8 |
| Minimum rate | €68.61 |
| Rate at a 25% margin | €91.48 |
This simplified example excludes VAT, income taxes and specific finance conditions. Replace each figure with the actual data for the equipment.
Run the calculation with your figures
Try the free calculator or use HireYield Offline to compare rates, utilisation, break-even, ROI and quotations without uploading your data to a server.
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