Tips, Tools and Best Practices for Selling Your Rental or Demo Fleet In your gear rental business, a ..Read more
Tips, Tools and Best Practices for Selling Your Rental or Demo Fleet
In your gear rental business, a significant amount of your revenue and margin comes from selling your used rental gear at the end of its rental life. Yes, I said rental life and not season or year. Read on for more information on rental life!
Used gear sales are different for every business, but there are best practices that you can follow. We are going to share some of these best practices with you below, gained from working in Home Depot’s Corporate Tool Rental management business which operates over 1100 tool rental locations in the US alone. In addition, (and most importantly) we have incorporated the best practices that we have found while visiting over 200 gear rental shops in our travels across the country, meeting awesome outfitters like you!
Gear Rental and Used Gear Sales: A Profit Making Combination
- The shop buys bike/paddle/ski gear at cost, say $3200 that retails at $4000
- Shop rents gear for 1-2 years, let’s say 30 times at $70 each and makes $1800 rental revenue after maintenance/labor of $10/rental
- The shop sells gear at the end of the season for 30% off retail and makes $2800 sales revenue
- Shop sales revenue of $4600 total (profit $1400) on a bike that retails at $4000 new and cost shop $3200
Not only did the shop just make 30+% margin on the product, but they were also able to drive 30 customers into the shop that hopefully bought merchandise while in the store (shirts, hats, stickers, jerseys, water bottles).
Although it is a simple idea, there are many considerations and factors that optimize the process and your revenue.
Determining Rental Life & When to Sell
Sell your rental gear at the end of its “Rental Life” to maximize your revenue. Depending on the type of gear, some assets you may decide to keep in the rental fleet for 3-4 years while others you may sell multiple times a year. Determining factors of the gear’s rental life and when to sell include:
- The age of the gear
- The number of hours it has been used/rented
- The condition of the gear
- The value of the gear
When to sell really depends on the gear, here are a couple of options:
- At the end of every season:
- If you’re a ski or a paddle shop and have your rental location only during the season, it makes sense to sell all the gear at the end of the season instead of incurring rent payments or storage payments in the offseason (depending on the cost of storage).
- It was a busy season and the equipment was used up to/beyond its rental life.
- If you’re in an industry where the latest gear matters or you’re a demo focused shop.
- Every other year or longer:
- If you have the space to hold inventory during the slow or offseason.
- The products don’t change frequently enough or are lower in value (and they’re not damaged). Think canoes, kayaks, beach cruisers, snowshoes, etc.
- The customer doesn’t care about the brand or the model as long as it is in great shape.
- Sell it all the time:
- If your rental program leans heavily towards a demo program. The best time to sell gear is right after a customer uses it! Customers love it when they walk away with the gear they just had a blast using.
- Allowing customers to demo product and buy it right away is a great way to increase sales, and typically you can sell for a higher price than heavily used rental gear.
**Don’t forget to work with your tax advisor/accountant on depreciation – there are some important tax benefits to depreciating your rental equipment!**
How Much to Sell Rental Gear For
Use our handy Calculator for Sale Price of Rental Equipment to figure how much you should sell the gear for at any given time.
- Instructions on how to use the calculator:
- Open Sheet
- Click File > Make a Copy > Save it on your own Google Drive
- Review example on the left first, then populate the green cells in the Enter Your Own Values section **don’t touch the grey cells, these are calculation cells***
- You can play with the % Discount on Gear cell to get your preferred Sale Price, Total Revenue and Total Profit numbers.
- If you are selling rental gear online and not locally, estimate the shipping cost and build it into the sale price (e.g. for bikes, partner with bikeflights.com to estimate shipping). People love hitting the easy button!
Where to Sell
- List it everywhere! Don’t just depend on a flier or word of mouth anymore. Once you’ve decided to sell, the sooner you sell, the sooner you get the money in the bank, keeping the cash flow rolling.
- Here are a few places that customers shop for used gear the most:
Selling Best Practices
- Pre-orders: We have seen many shops pre-sell their rental gear
- Example: A rental shop in Bend will sell you a demo bike now and you can pick it up in November.
- Build the hype – before you have the sale, start posting details about the items that will be sold, the prices and always share the scarcity ‘’only a few items left’’ or ‘’won’t last long’’ in your call to action.
- Give the customer the full download on the rentals. This information is truly helpful to the customer. They get the confidence that the shop takes care of the gear and has been on top of its service and helps you save time answering the same questions over and over again.
- 2018 model, rental demo fleet 2018-2019
- Rented 17 times
- Service completed June 2018:
- New brake pads, suspension service
- PRO TIP: Take just a couple of minutes and add details to the images, you will get much higher engagement and conversion (especially on social channels). You can use tools like Canva.com or other easy software to spice up the images. For Example:
2018 BMC Speedfox 03-1 29er that retails for $3150 selling for only $1999.
PROOF: Did this image capture your attention more than the plain text version? This is just a quick version – you can add features of the bike, any upgrades, and more to the picture!
Can you help other shops by providing YOUR best practices? We want to hear from you! Please fill out the survey, comment below or send us a note and we will continue to update this article with the most useful tips on making the most out of your used gear sales.