Don’t you wish your pricing strategy included no discounts?
How many times does your customer request a special discount? Do you have customers that have discounted rates by type of equipment or a percentage discount on rental, but not on sales or vice versa? If your answer is yes, you are not alone. This is a very common practice in the equipment rental industry.
Managing discounts can be a painful and tedious process if it’s done manually, but a very simple process if it’s done in your rental software.
It’s important that your rental software allows discounts at the equipment, contract, customer and job site level. A customer may negotiate a discounted rate for all rentals for a particular big job site or maybe the customer is a National Account that has a flat percentage discount on all rentals. Whatever the case, this should be a one-time configuration set up that can be addressed every year even if your rates go up.
Another common industry standard is the Damage Waiver charge, which is usually a percentage of the rental amount on a contract. But what happens if the equipment on that contract is discounted? Well, in most cases the percentage collected for damage waivers will use the discounted amount as the base. Again, it’s important that your rental software allows you to charge damage waiver based on the list rental price and not the discounted one. That ensures that your damage waiver recovery doesn’t get affected by the discounts given to your customers.
A very important factor of discounting is the ability to limit the levels of discounting. A salesman could give a 30% discount to his customer, but if the allowed discount limit for that equipment is 20%, he will need manager approval to go that high. This could require a couple phone calls between salesman, branch manager and regional manager or could just take a minute to have the required manager approve the discount using the discount management functionality from your rental software.
Discounts are not necessarily a desired practice for equipment rental companies. To help control how much revenue is missed due to discounting, it is important to have reports that show the discount percentage by region, branch and salesman. You can even set up an exception report that notifies the branch manager when a certain percentage level of discount has been reached at any time within the month, quarter or year.
If this functionality is something that you think your company could benefit from, contact Wynne Systems here.
Check out our last free e-book titled, The Comprehensive Guide to Ancillary Fees, for other pricing strategies.
