Pricing Your Outdoor Rental Services

Competition

The first place to start is a competitive analysis. Hopefully, you did this before you placed your order for inflatables, but if not, get to it now!

Call your competitors, check out their websites and keep your eyes open for advertisements and fliers in your area. When you call, make sure to find out:

How the rental time frame is structured
What the prices are
Whether that price includes delivery and tax
How much, if any, deposit is required
What type of payments are accepted
The size, quantity and condition of their units

More than likely if the competitor has a website, most of this information should be posted right there. If you don’t know the web address try typing in the name of the competitor’s rental company and searching for it on Google.

It feels a little funny at first, but trust me, they will be doing the same to you soon enough! (Remember when calling that many people have caller ID.)

I strongly recommend you input all the information on a spreadsheet. It will make it easier to compare prices and services.

Differentiation

Now it’s time to think about what makes your business different. If you read my past article on defining your business image, you already know what makes you different.

Your rental period may be different, your service better, your inflatables newer. Why do you need to know this stuff to set your pricing? Because it makes a difference! When potential clients call, you want to be confident that when you quote a price your service is worth it. Thinking through all the variables prepares you to “sell” a client on the value of choosing your company.

Low Cost Leader

You may think that the best way to start out is by undercutting all of the competition. Believe me, this is not the best strategy for most companies.

The exception is for people who are buying older equipment and don’t want to put a lot of time and energy into building their business. Plenty of consumers only use cost as their consideration, so the lowest-priced company in any area will get its share of business.

In my experience, people who base decisions solely on price are also the ones most likely to abuse or neglect your equipment and they also complain the loudest, wanting discounts for setup delays, rain or any other minor complaint. If this doesn’t bother you, then low-cost is the strategy for you.

Introductory Prices

I recommend this strategy for most startup companies. Don’t start out with low prices. Go ahead and price your rentals fairly. You need business to get started, so offer introductory specials to stimulate business.

The advantages of this strategy are:

You get people to take a chance on you, an unknown company.
You establish the price in their mind so they aren’t surprised when they call you next year.
You don’t erode the “going rate” for rentals in your area, forcing other companies to lower their prices to compete.
You influence their decision with the idea of getting a bargain, better service/equipment for a good price.
You have the opportunity to show customers the good job you do and, consequently, should earn referrals.

High/Low Prices

The high/low strategy is very similar to the introductory pricing, except that you maintain lower prices through changing promotions.

Many companies will use this strategy during slow periods (such as the winter) and other times they need to stimulate business. The main benefit to high/low pricing is raising the value of a rental in the mind of the customer and helping them to feel smart by hiring you because they are getting such a good deal.

Premium Pricing

Premium pricing should be the goal of every rental company. You want your services to be in such demand, that you can charge a profitable fee and still stay busy. Less work, more money!

This strategy is ideal for companies who focus on clean, well maintained equipment and top-notch delivery service. It’s not just an ideal; it really works. By building customer loyalty over a period of time, you can get such glowing referrals that your clients wouldn’t dream of calling anyone else or shopping around.

Pricing Impact

Every rental company needs to carefully consider their pricing strategy when starting out. While it’s easy to lower prices, it is very difficult to raise them. Try to stay within a reasonable range for pricing in your area so that you don’t set an expectation that moonwalk rentals are a cheap commodity or an expensive indulgence.