Which KPIs should I track in my event rental business?
Track six numbers: net profit margin after you pay yourself, average order value, add-ons per order, utilization by item, delivery cost per order, and months of cash on hand for the slow season. Revenue and bookings alone can't tell you if you are making money. These six show where profit is made and where it leaks.
Which KPIs matter most for a party rental company?
The ones tied to profit and cash, not just bookings. Here are the six, what each one tells you, and how to figure it.
| KPI | What it tells you | How to figure it |
|---|---|---|
| Net profit margin | Whether the business pays you | Net profit divided by total revenue, after depreciation and fair pay for your own hours |
| Average order value | Whether each truck trip is worth making | Rental revenue divided by number of orders |
| Add-on rate | How much each order grows past the base rental | Orders with at least one add-on divided by total orders |
| Utilization by item | Which units earn their spot in the warehouse | Days rented divided by days available in your season |
| Delivery cost per order | Whether your delivery fees cover the trip | Crew labor, fuel and vehicle wear divided by deliveries, by distance range |
| Off-season cash on hand | Whether you make it to spring | Cash in the bank divided by average monthly fixed costs |
Your rental software (Inflatable Office, Goodshuffle Pro, Booqable or ERS) holds most of the order data. QuickBooks holds the costs. You need both. Clean, monthly books are what make these numbers real. Here is how we handle bookkeeping for party and event rental companies.
Why should net margin be the first number I check?
Because it is the only one that says whether the business pays you. Revenue can grow while profit shrinks.
Ideally, we’d expect to see margins in excess of 20%. Some of the best performing companies we advise land around a 30% net. A 10 percent margin signals a cause for concern. Read more on what a good profit margin is for a party rental business.
Count it honestly or the number lies to you:
- Book depreciation on bounce houses, tents, tables and chairs.
- Pay yourself for the Saturday deliveries you run.
- Keep refundable damage deposits out of revenue until you actually keep them.
How do I figure utilization on bounce houses, tents and tables?
Divide the days a unit was out by the days it could have been out during your season. Do it by item or item group, not for the whole fleet.
Say your season runs 30 weekends. A water slide went out on 12 of them, so it sits at 40 percent. A castle went out 27 weekends, so it sits at 90 percent. The castle is telling you to buy a second one. The slide is telling you to reprice it, bundle it or sell it.
On a revenue report, those two units look alike. Utilization is what separates them.
Utilization alone can still fool you. A tent that rents 10 times a year at a high price can earn more than a combo unit that rents 40 times. Pair utilization with the full cost per turn: storing it all year, pulling it, setting it up, tearing it down, bringing it back, cleaning it, repairing it and putting it away.
Why should I track add-ons per order?
Because it shows whether each order is growing without another truck trip.
Say you run 100 orders a season and 20 of them include an add-on. Get that to 40 orders with a $60 add-on each and you add $1,200 in revenue on trips you were already making. The crew, truck and fuel were already paid for, so most of that drops to profit.
Common accounting advice would say to cut costs. Costs can only be cut so much. We’ve found it’s far more effective to look into the business’s sales motion. Oftentimes, there are one or two additional processes in the sales procedure that can create opportunities for upsells, of which are often entirely profit.
If your base prices are the problem, start with how to price party rentals so you actually make a profit.
What does each delivery really cost me?
Usually more than the delivery fee covers once labor and vehicle wear are counted. Break it out by distance range so you can see it.
Say a two-person crew costs $25 an hour each with payroll costs, and the round trip plus setup and teardown takes 3 hours. That is $150 in labor before fuel and truck wear. A flat $40 delivery fee covers less than a third of the labor alone. The rest comes out of the rental price.
Track labor and fuel by order, in your rental software or with job tags in QuickBooks. Then set delivery fees by distance range, for example 0 to 10 miles, 10 to 25 miles, and 25 miles and up, with an order minimum for the far ones. Our guide to job costing delivery and setup labor walks through the setup.
How often should I check these numbers?
Monthly, from closed books, with a few checked weekly in season. A number you see in January is history. A number you see every month is a decision.
- Weekly in season: bookings, average order value and add-on rate.
- Monthly: net margin, delivery cost per order and utilization by item.
- Before the slow season: months of cash on hand.
Say your fixed costs (insurance, storage, software, truck payments and base payroll) run $6,000 a month and you have $24,000 in the bank in October. That covers 4 months. If your slow season runs 5, you know it now, not in February. More on that in our guide to off-season cash flow for party rental companies.
Frequently asked questions
What is a good utilization rate for party rentals?
No single number fits every unit. Compare each item with the rest of your fleet over a full season. Units that sit in your bottom group two seasons in a row are the ones to reprice, bundle or sell.
Can I get these KPIs from QuickBooks alone?
Not all of them. QuickBooks holds your costs and profit. Your rental software holds orders, add-ons and how often each unit went out, so you need both, matched every month.
What is the most common KPI mistake event rental owners make?
Judging the year by revenue. A record revenue year can still be a thin profit year if delivery labor, equipment wear and your own pay are not counted. Net margin after you pay yourself is the number that tells the truth.
Want to see these six numbers for your own company? Find more profit without adding new customers.
