Yield management in equipment rental is a strategy that pays off for many machine rental companies. Why is this?
Yield management is defined by adapting rates according to certain criteria such as the demand, the environment, or the context. Initially democratized in the tourism and hotel sectors, this type of management is gaining ground in the rental business, particularly in the rental of equipment and machinery. Let us analyze together the yield management in equipment rental, a trend that is naturally tailored to service companies!
What is yield management in equipment rental?
Yield management in equipment leasing is an optimization of the profit of the rental of equipment and machinery. This strategy is implemented through real-time pricing, also known as dynamic pricing. In short, high demand naturally drives up prices, and vice versa. This trend owes its success to the increase in online bookings and price comparisons on the Internet. It is important to specify that dynamic pricing is different from personalized pricing, which consists in taking into account the personal profile of the customer and tailoring its prices accordingly, an illegal practice in Europe.
As far as yield management is concerned, the duration of a reservation and the price of equipment rental is tailored to obtain a coherent offer based on the situation. Thus, many equipment rental companies do not hesitate to increase prices in periods of high demand. This strategy then allows them to lower prices in off-peak periods in order to attract more customers and consumers. This is a perfect example of yield management in equipment leasing.
Optimizing the price of equipment rental in real time allows to maximize the turnover and margins. The price is no longer fixed as with the majority of machine rental companies, but is tailored to demand. Increasing the fill rate and differentiating one’s offer from competitors are the main arguments. Nevertheless, you may think that the potential customer is harmed by this management method? On the contrary, in many cases, the latter will be satisfied by paying a price tailored to his situation. Yield management in equipment rental therefore increases the flexibility of your offer and your user base, regardless of the type of machine rented or the duration (short, medium and long term leases).
What are the yield management techniques in the management of equipment rental?
There are many yield management techniques in the management of equipment rentals. However, it is not always easy to offer tailored and variable rates in order to make your equipment fleet profitable and in turn maximize your profits. It is thus necessary to analyze several criteria. These criteria take into consideration the duration of the machine lease, the annual history, the availability threshold and of course the time of year. The weather or nearby events also have a great influence on the demand. Analyzing, anticipating, and monitoring the offer of competitors on a continuous basis is therefore very important to optimize the yield management of your equipment rental company. This will guide you towards the price directions to follow.
This type of forecast then determine the yield management in machine rental. This yield management strategy must be pursued until the last stages of the rental in order to anticipate and meet the demand of the rental companies. Fortunately, today there are effective IT tools and solutions to automate these practices and contribute to your growth.
How to optimize the equipment rental activity?
Yield management is thus a high-performance technique for optimizing the equipment rental business while increasing customer satisfaction and the number of rental companies. However, how should you implement this yield management method? To answer this question and simplify the daily life of professionals, hitechsoftware has developed the harmony equipment rental software. This machine rental management system integrates a complete interface that optimizes all aspects of the equipment rental activity.
Thanks to its analysis and decision support tools, harmony allows you to have an overview of all the data resulting from your equipment rental business. This real-time monitoring of your activity via an intuitive dashboard will facilitate the tailored pricing of your machines and the implementation of yield management. Find more information about our harmony equipment rental management system here.