Listen instead on your Monday Morning Drive:

Let me make a bold statement: Rental pricing is for rental companies.

When you rent a lawnmower from Home Depot and it doesn’t work, you return it and get another one. Home Depot isn’t responsible for how well you mow your lawn or whether your lawn gets mowed at all — that’s on you. Their only responsibility is to provide a lawnmower that starts when you want it to.

But if you do shows for a living, your responsibility is for the show to work. People need to see and hear, and you need to make your cues. If an item fails and your show fails, there’s a 90% chance you won’t get paid — because you’re responsible for the outcome.

Shows are not rentals.

Rental Terms and Conditions Are for Newbs

Your responsibility for getting the show done is implied in both the project scope of work and show crew pricing. Yet many companies still price like rental companies, using rental items and rental terms and conditions.

Does anyone believe they can wiggle out of responsibility by pointing to fine print that says, “The client is responsible for letting us know if the equipment doesn’t work”?

You wouldn’t play that card with your show customer. You probably don’t even know that clause exists, because who reads their own pricing term sheet? Two pages of six-point type don’t inspire careful reading.

Rental terms and conditions don’t belong on event proposals. They don’t apply. So, they make you look foolish.

The Rental Pricing Myth

We all know rental prices are made up. We assume smarter people figured out how to price equipment and talent, and we copy them, adding our own small adjustments: “I’m worth a little more” or “I can buy cheaper gear.”

Unfortunately, only half that formula is right — we did copy each other. The people who made up those prices weren’t any smarter than we are. They thought somebody else was smart and copied their price, creating a cycle of copying prices that mean nothing.

When Rental Pricing Makes Sense

If you’re a rental company that rents equipment with rental terms to rental users, and you’re not responsible for how well users operate your equipment, keep doing what you’re doing.

Your rental rate is whatever the market will bear. That’s a valid business model.

A smart rental company makes rates seasonal. The key is maximizing utilization to earn maximum gross profit against equipment life, accounting for repairs and maintenance. Getting equipment out during slow months puts money in the bank.

The rental industry follows a simple model: rent equipment, maintain it well, and rent it again. When you’re only responsible for functionality, life is straightforward.

When You’re Not a Rental Company

If you produce shows, galas, concerts, experiences, or meetings — if you put technical crews and operators on jobs; if there’s design, creative work, or artistry in your service — you’re not a rental company.

You’re like a skilled carpenter who arrives with the right tools. Maybe they occasionally rent specialty equipment for specific jobs. But your customers aren’t renting your tools — they’re hiring someone who knows what tools to bring and how to use them.

The more skilled the carpenter, the better the tools, the more expensive the carpenter, the better the work, the more expensive the job. Better outcomes command higher prices.

Three different companies can do the same show with three different values based on their expertise and tools. A great carpenter with mediocre tools can do good work, and a mediocre carpenter with great tools might do so-so work.

The talent makes the difference. Good tools help, but customers pay for expertise.

Price Doesn’t Exist — Only Profit Does

Here’s another bold statement: There’s no such thing as price. There’s only profit.

Price is a temporary number based on profit. It’s just how you and the customer communicate about exchanging money for services. Customers care about price because that’s what they pay. You care about profit, which means you need to calculate it properly.

Price is a tool to help you get more profit. Better tools lead to better profit. Your job in sales is conveying price to buyers in a way they understand and accept.

Stop These Common Excuses

I often hear owners say, “We bid on this job. We worked hard to get the numbers down. The client liked us, but they hired someone else. I saw their quote — there’s no way they’re making money at that price. It was below my cost!”

I laugh (and cry a little inside) because:

• You don’t know their costs
• You don’t know if they’re making money
• They make money differently than you do
• They made up their price, just like you did

There’s a good chance your costs are too high or you don’t know how to calculate your cost.

Stop looking for magic pricing formulas. They don’t exist.

Three Ways to Make More Money Now

You don’t need to overhaul your pricing system. Just do these three things, and you’ll make more money on every show:

1. Use Margin, Not Markup

Ban the word “markup” from your office. Never say it in front of customers. Markup sounds cheap and transactional, like it should be a small number.

Margin is money you can actually spend. You’re cheating yourself out of percentage points for no good reason if you mark something up instead of applying a margin. Learn the difference.

2. Estimate Talent First

When budgeting a show, start with talent. Don’t tell me you can’t know what people you need until you figure out the gear. If you don’t know what talent you need, you have no business building that estimate.

Put talent costs first. If you’re making a 30%–50% margin on talent and related costs, your job will be profitable. The profit is baked in — you don’t have to worry about “rental” pricing because you’re already making a profit.

3. Stop Thinking Like a Rental Company

Quit showing your line-by-line math to customers. Show them math that makes them comfortable, but it doesn’t have to be your math. If your rental math needs an 80% discount, show them rental prices with an 80% discount.

If the gear sits on your shelf and you don’t give away labor, that job will make plenty of money.

What You Really Need

You don’t need more revenue. You need more profit.

Revenue comes from pricing, which we’ve established is artificial. Calculate your profit. Price is just what you and the client agree on.

We’ll still weigh profit against risk:

• When you’re busy, one more job might be risky, so you want a high margin.
• When you’re slow, one more job could cover payroll, so you might accept less profit to keep the doors open.

Pricing Strategy Toolbox

“But what if my customer wants the same price next time?” you ask.

In what world do any of us get the same price next time? Are your costs static? Isn’t busy season more expensive?

You need three different pricing strategies in your toolbox:

• The lowest possible price
• The best deal right now
• The best value for the money

These strategies appeal to three different buyers — or the same buyer in three different mindsets, depending on their situation that day, week, or job. You need all three, and yes, they’re all profitable.

Moving Forward

Let go of your rental prices and think strategically. Pick the right tools, learn when to use them, and focus on where profit really happens. (Remember, it’s in talent.)

We never wanted more revenue. We always wanted more profit. Let your pricing system reflect the business you’re trying to build, not the business you copied from someone else.

If you need help building a better pricing and profit system for your team, reach out. Let’s put rental pricing where it belongs: in rental companies.