Rental Equipment > Mark Up?

ProWallGuy

I often have to rent scaffolding, lifts, etc for jobs. I usually tack a little something on to the rental price basically to cover myself if I go over a day on the use. Do you guys generally mark up rental equipment?

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Wallpaper Hanger St. Louis
Digital Murals Installation

SLSTech

Yes standard markup along with the time spent to run & get it, return it, etc...

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ProWallGuy

Thanks, I assumed most would. But what would you call a standard mark up? I mark up my materials 60%, but my materials rarely exceed 10% of my total job cost. I would think that 60% would be awfully high for a piece of equipment that I get delivered, use, and have them pick back up. Would there be a different mark up for equipment versus materials?

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Wallpaper Hanger St. Louis
Digital Murals Installation

rbsremodeling

I do about 50% on rental equipment. My labor and Material mark up is the same across the board for the most part

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SLSTech

Sorry - there is no right or wrong answer to that - if 60 seems to high, drop it down some to maybe 50 or 20 or whatever. Might I suggest that if you are using this equipment a lot - where you can almost buy it in a year for what it costs to rent it - purchase it & charge the customers the regular rental rate without a MU or with one - your choice.

If I have to break out the big tools, customers get charged for them. I know plenty of guys that charge / add a daily rental fee for the truck used, hand tools, power tools, etc... that will be used, into their contract prices.

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buildpinnacle

If a dollar get spent on my jobs as any type of cost, it gets marked up. I mark up everything across the board at the same rate. It is a job cost no different than the materials. I am speaking, of course, of Capacity Based Mark Up. I don't use a seperate mark up percentage for in house labor, materials, subcontractors, rentals, etc. They all get marked up the same. I won't take labor only work, anyway. I find that in those types of jobs, the HO never buys the right stuff or the right amount. I spend my time getting what I actually need or lose time becasue its not there when I need it. If I spend the time to provide them a list, I have spent time that I didn't get paid to figure out what they need. T/M jobs excluded.

The rule of thumb for rental equipment is that if you spend more than 15% of the items cost in a year to rent it, you should of bought it.

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SLSTech

15% ???? That seems awfully low, maybe not for scaffolding, but for power tools?

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RobertCDF

Blindly coming up with a percentage is not the way to find out if you need to purchase something. ALL associated costs need to be considered. If its big tools then repairs, insurance, maintenance, if you need to buy a new truck, or trailer for it... All these costs need to be considered as well as if the equipment is prone to being "obsolete" It will still do the job but the new one does it 50% faster and now you have to spend a lot more to get a new one. If the tool has a life span of 2 years and your 18 months of rental is the same as buying it... I think I would keep renting.

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Robert Shaw
Colorado Springs Custom Decks
Colorado Custom Decks
Custom Composite Decks

AtlRemodeling

I am not a big fan of renting anything. I feel that if I need to rent it and can charge it over a couple of jobs it is better to buy it.

That said, if I must rent something it gets the same mark up as everything else. This years' budget means it gets marked 40%. That varies from year to year based upon budget/anticipated sales/etc.

Mike Finley

I don't know if you are working T&M, maybe you are, but unless you are working for T&M what difference would the mark up precentage be? If all the customer is getting is a final price for the job you can mark up your rental %10,000 and be working for $1.00 an hour if you want. What you mark it up and everything else just goes into creating a number for the job as a total that the customer either says yes or no to.

Greg Di

What if you rent a piece of equipment that your competitor (or peers) own as a standard item? Then what?

I had this issue with scaffolding. I don't own any because I rarely need it and don't want to store it. I built the rental fee and markup into my price and I was told that "everyone" has scaffolding so that's why I lost the project.

I dunno...

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Double-A

How much are you spending on rental equipment a year? For things that costs us less than say one thousand, we add the costs into deployment and not worry about it. Easier to wrap it up in one package than to try to deal with it as a unique item on every, or several jobs.

For things over the one thousand per year, we treat them as unique items.

As for markup, we have a profit percentage for all moneys we invest in the business. This includes operating capital. If we pay for it, it gets marked up.

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buildpinnacle

Threads like this and the profit and margin threads explain why contractor's bids differ so greatly, they should. We all have different costs associated with our business operations. The 15% number is just what I've heard for years. I know a few years ago I did a 1,000,000 SF roof replacement and budgeted in for a skytrack rental through the course of the project which was 10 months. I paid $3400 per month for a piece of machinery that could be bought brand new for $50,000 and much less for a good used one. I should own one based off of that project and the maintenance and upkeep would be much less of an effect on my OH than the rental ended up costing me. Although it was budgeted, I am sick with how the math turned out....I didn't look at it that way at the time. Whatever the number is, if it is an item that you rent regularly, I think you will come out money ahead by purchasing it. It also saves you time spent at the rental yard or taking back rental items that don't work or break down when you getting ready to do with it what you rented it for. Right now, there are a lot of contractors dumping good tools and equipment for next to nothing. I just bought a $4,000 mortar mixer and a target brick saw for $1000 out the door from a mason. I rent this piece of equipment for $300.00 per week for the mixer and $100.00 for the saw.

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dirt diggler

.... no ... i like to lose a little bit of money every now and then. Keeps me hungry

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Thanks in advance!!!

ArtKit

We markup about 30% on the rental equipment charge, but if your established long enough you should just buy your own scaffolding... its cheaper in the long run!

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ProWallGuy

Sorry, I should've been clearer. I own a bunch of scaffolding. My main question was about lifts I reckon. I rent one maybe 2-4 times per year. Most decent scissor lifts I've seen run in the high thousands to purchase. I can't see myself ponying up that much for something I can rent for a couple hundred bucks a day. I wouldn't want to store it, maintenance it, nor tote it behind my truck on out-of-town jobs. I have always marked up the rental cost, but just was checking to make sure I wasn't doing something stupid or completely out of line. Thanks to all who responded (except dirt ).

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Wallpaper Hanger St. Louis
Digital Murals Installation

buildpinnacle

Scissor lifts around here have been going for around $3K for some time now used. Seems like a good buy if I used them.

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