How do I price my party rentals so I actually make a profit?

Price each party rental from what one booking really costs you, not from what the company down the road charges. Add up the delivery trip, setup labor, cleaning, wear on the unit and a share of your year-round overhead. Then add the profit you want on top, and check the market last to see if your number holds up.

Most pricing guides start with a percentage of what you paid for the item, or with a competitor's rate card. Booqable's pricing playbook is a good example. Those are fine starting points. They just don't tell you whether a Saturday booking still makes money after the truck comes back. Here is how to run the math from the books side.

What does one rental actually cost me?

Every booking carries costs that never show up on the rate card. List them out for one typical order:

• Delivery and pickup. Driver and helper hours both ways, fuel, and a share of the truck payment and insurance.
• Setup and teardown. Staking a bounce house, building a tent, setting tables, chairs and linens.
• Cleaning and turnaround. Washing vinyl, laundering linens, drying a wet tent before it goes back on the shelf.
• Wear. The unit won't last forever. Spread what you paid for it over the bookings you expect it to get.
• Damage and losses your damage waiver doesn't cover.
• Card fees and software. Processing fees and your rental software subscription.

Here is a worked example. Say a bounce house cost you $3,000 and you expect it to book 120 times before you retire it. That is $25 of wear every time it goes out. A two-person crew spends 2.5 hours on delivery, setup and pickup at $20 an hour each, fully loaded. That is $100. Truck and fuel for the round trip run $30. Cleaning is $15. Card fees on a $250 rental run about $7.50.

That one booking costs about $178 before you pay for anything else in the business.

How do I cover the slow months in my price?

This is the step most owners skip. Your warehouse rent, insurance, software, phones and office time run all 12 months. Your bookings don't. Northern companies slow down in winter. Desert markets can slow down in the hottest months. Either way, the busy season has to pay for the whole year.

Say your overhead runs $4,000 a month, or $48,000 a year. If you book 800 rentals a year, every booking has to carry $60 of overhead. Price only for the busy months and you will feel rich in July and broke in January.

Now the bounce house from above costs about $238 per booking. If you rent it for $250, you make about $12. That is a thin line, and one rained-out weekend or a torn panel wipes it out.

How much profit should I add on top?

Pick a profit target for the year, then work it back to each booking. Say you want $20,000 in profit from those 800 bookings. That is $25 per booking on top of your full cost.

That number is your floor, not your price. Now look at the market. If competitors charge $300 for the same unit, you have room. If they charge $225, find out why before you match them. They may run a smaller crew, deliver closer to home, or be losing money without knowing it.

Should I charge delivery separately or build it into the price?

The trip is often the biggest single cost in the booking. A small table-and-chair order across town can cost as much to deliver as a full tent package. If delivery is baked into one flat price, your small and far-away orders lose money and your big, close orders cover for them.

Two fixes work well:

• Charge delivery by zone or distance. Most rental software, including Inflatable Office, Goodshuffle Pro, Booqable and ERS, lets you set delivery fees. Use your real cost per trip to set them.
• Set an order minimum. If a truck and two people cost you about $130 to roll, an order under that line is a loss before the customer opens the gate.

Treat your damage waiver the same way. Book damage waiver income to its own account in QuickBooks and compare it to what you actually spend on repairs. If repairs run higher, the waiver is priced too low.

How do I know if my prices are working?

Your books should answer this, not your gut. A packed Saturday feels like proof that your prices are fine. Busy and profitable are not the same thing.

Set up QuickBooks so it can show you:

• Revenue split by category: inflatables, tents, tables and chairs, linens, delivery and damage waivers.
• Crew labor and truck costs in their own accounts, so you can see cost per delivery.
• Bookings per unit, from your rental software, so you can see which items earn their shelf space.

Rerun the price floor math before every busy season. Rerun it again any time a big cost moves: a new truck payment, an insurance renewal, or raises for your crew. A price that worked two years ago may be a loss today.

If your books aren't set up to show these numbers yet, here is how we approach bookkeeping for party and event rental companies.

FAQ

Should I just match my competitors' prices?

Use competitors to check your price, not to set it. They may have lower costs, a different service area, or they may be losing money. Know your own price floor first, then decide where to land.

Is it better to raise my rental rates or add a delivery fee?

If small or far-away orders are the ones losing money, a delivery fee or order minimum fixes the problem where it starts. If every booking is thin, your base rental rates are too low and need to go up.

How often should I review my party rental prices?

At least once a year, before your busy season starts. Also review them any time a big cost changes, like a new truck, an insurance renewal or higher crew pay.

About the author

Austin Reckard is the founder of 10.4 Financial, a bookkeeping and fractional CFO firm for party and event rental companies. He ran an inflatable rental company in Arizona for five years. He helps party and event rental owners find $10,000 a year in profit in about 6 weeks without adding a single customer.

Want to see what your own numbers say? Start here.