Guide 2 · Pricing

How much should you charge to rent out equipment?

Reading time about 8 minutesUpdated August 2026Worked example included

There are two prices, and you need both

Every machine in your yard has two numbers attached to it, and confusing them is the most expensive mistake in the business.

The first is the floor: the rate at which the machine exactly covers what it costs you to own for a year, given how busy you honestly expect it to be. It is arithmetic. Nobody negotiates it, nobody has an opinion about it, and it does not care what the yard down the road is doing. Below it you are paying your customer to take your machine away.

The second is the market price: what a contractor in your area will actually pay for a day of that machine this month. It is set by what the machine is worth to them — the crew it saves, the deadline it protects — and by how many competing machines are sitting idle nearby. It has almost nothing to do with what you paid.

Your job is to know the floor precisely and the market roughly, and to sell as far above the floor as the market lets you. Most operators do it the other way round: they know the market price by heart and have never once calculated the floor. That is how a yard ends up busy and broke.

Finding your floor in ten minutes

Take one machine. Add up everything it costs you to own for a year: real depreciation (purchase price minus what it will honestly sell for, divided by the years you keep it), interest on the finance, maintenance and wear parts, insurance, registration and inspection, and a fair share of the yard and office overhead. Then divide by the number of days that machine was on hire and billed last year — not the days it was available.

Then find the market

The floor for our excavator is $70 a day. The published 2026 range for a 2–4 tonne mini excavator in the United States is roughly $200–$350 a day, $650–$1,000 a week, $1,800–$2,800 a month, varying by region and attachment. Your market may be quite different — rates in the Gulf, in Europe and in South East Asia all behave differently — but the shape of the answer is the same everywhere: the market rate sits several times above the cost floor.

That gap is not greed. It exists because the customer is not buying a day of a machine, they are buying a day of not having to own one: no capital, no maintenance, no insurance, no resale risk, and someone else's problem when it breaks. You are being paid for absorbing all of that. The cost floor tells you the point at which absorbing it stops being worth your while.

Find your market price by doing the boring thing: ring three competitors as a customer, look at what the national chains publish online for your region, and ask your own long-standing customers what they last paid elsewhere. Write the numbers down. Repeat every six months, because rates move.

Setting the day, week and month rates

Almost nobody hires by the day only. You need a ladder, and the ladder needs to make sense when you convert every rung to the same unit: revenue per day on hire.

This is the pattern almost every rate card has, and it is worth understanding rather than copying. Long hires carry far less cost per day — one delivery, one collection, one wash, one inspection instead of thirty — so a discount is justified. But the discount is usually set by what the customer will push for, not by what the cost saving actually is. Somewhere down the ladder the two diverge, and past that point every extra month of hire makes the machine less profitable, not more.

Find where that point is on your own card and put a hard stop there. A long-term rate below the floor is not a loss-leader; it is a machine locked out of the market for a quarter while losing money every day.

The charges that decide whether you make money

On many rental fleets the machine rate is close to a market commodity and the margin lives in what surrounds it. Decide these deliberately, publish them, and apply them consistently:

• Delivery and collection. Charge them separately, both ways, priced by distance. Burying transport in the machine rate makes near customers subsidise far ones and makes your rate look expensive to the very customers who are cheapest to serve.
• Minimum hire period. Usually one day, often two or three for anything that needs a low-loader. Without it, a two-hour job consumes a full day of yard capacity.
• Fuel policy. Out full, back full, or you refill and bill it at a published rate per litre plus a handling charge. State it on the contract, not on the phone.
• Damage waiver. Typically 8–15 per cent of the hire value. It is genuine income and it removes a standing argument with customers about wear versus damage.
• Cleaning. A published charge for a machine returned filthy. You will use it rarely; its main job is to make sure most machines come back clean.
• Out-of-hours and weekend collection. If your yard opens Saturday for one customer, that Saturday should be priced.
• Operator, if you supply one. Price it as a separate line, at a rate that covers wages, overtime, insurance and downtime. Rolled into the machine rate it hides both the labour margin and the machine margin.

When to discount, and when to say no

Discounting is not automatically wrong. It is wrong when it is reflexive. Three tests before you drop a rate:

1. Is the machine otherwise idle? A discounted hire on a machine that would have sat in the yard adds contribution, because the depreciation and interest are being paid regardless. A discounted hire on a machine that had another enquiry behind it costs you the difference twice over.
2. Does it stay above the floor? Below the floor, more hire days make the year worse. There is no volume argument that survives this. A machine losing $8 a day loses more the busier it gets.
3. Does the rate come back up afterwards? Rates are sticky. The customer who got twenty per cent off in a quiet March will expect it in a busy September, and will tell two other contractors. If you cannot see how the rate returns to normal, you have not given a discount, you have repriced the machine.

When you do need to move, prefer giving something that costs you less than cash: free delivery on a long hire, a free first day on a month, a better attachment at the same rate. These protect the headline rate, which is what the rest of your market is watching.

Reviewing the card without burning a week

Twice a year, take the fleet list and do three passes. First, recalculate the floor for each class using last year's actual utilisation and today's honest resale values, both of which will have moved. Second, mark the twenty per cent of machines that earned the least against their cost — those are the ones to reprice, move to a different depot, or sell. Third, check the top of the ladder: long-term rates drift downwards year after year because every negotiation goes the same direction, and nothing pulls them back up unless you do it deliberately.

That is a half-day exercise for a mixed fleet if you have the cost figures to hand, which is exactly what the calculator is for.

Common questions