Adapting Your Rates to Changes in the Summer 2022 Market
As an Owner, your goal is to make your vehicle stand out and make a profit. Monitoring trends and adjusting your rates to be competitive is the best way to attract new Renters. The market is changing this summer, and we have data to help you make the right adjustments to your listing and be positioned for success.
Price your vehicle competitively and ensure a positive bottom line for your business. And with that, you can keep your vehicle out on the road.
Three Factors Affecting Rental Rates
2021 saw very high demand for commercial vehicles, which increased rental prices. A combination of limited supplies for new and used vehicle inventory, the driver shortage, lower gas prices, spot rates, and more consumer spending were just a few factors that contributed to businesses willing to pay a little extra for their rentals.
As the market shifts halfway into 2022, industry experts expect some drops in vehicle rental rates as new factors come into play. Here are just a few of them:
1. The rising cost of diesel. The national average for diesel in the US is about $5.62/per gallon. That's an increase of about $3.22/per gallon since May 2021. That's a big jump which is sure to impact smaller fleets who will be looking to cut down on costs.
2. Consumer spending and inflation. The height of COVID saw a big shift towards e-commerce. Because people weren’t going out as much, they had extra cash to spend. With inflation levels at record highs, expect to see less consumer spending in the near future. As a result, there won’t be as many vehicle rentals to make these deliveries due to a decrease in demand for goods and supplies.
3. The need for more steady business. Contract rates are on the rise because it allows businesses to lock in a price that works better for them. Now that deliveries are going down, companies are less inclined to go with a spot rate option that bases its price on the excess or shortage of equipment on market conditions. This change is playing into the price expectations for rentals.
Set the Right Rates, See the Results
Market-friendly booking rates can help your vehicle be rented out consistently. Pricing too high in today’s market will certainly result in less rental activity on your listing.
Remember that the COOP platform helps you set the right rate. We make it easy to stay on top of changing trends so that you can enhance your business needs with the click of a button. Even if you go down a few dollars today, you will be setting yourself up for success now.
Because of changes in the market, we suggest Owners keep rates at our recommended rate or lower it by just a few dollars a day. Vehicles listed at or below the recommended rates are 60% more likely to transact than vehicles listed above the recommended rate. We determine these recommended rates by looking at the rental market to remain competitive and give Owners the best chance to rent out their vehicle.
In one example, one of our customers decreased the rates of their vehicles by just $5/day. This slight adjustment will result in thousands of dollars in earnings over an extended period versus no earnings or delayed earnings. And with that change, they were able to get more interest from Renters which led to securing a long-term reservation.
Let’s break it down for you as an example:
You have 10 trailers
Instead of pricing at $35/day, you price at $30/day
$30 x 30 days = $900 per trailer
That’s $9,000 per month or $54,000 for 6 months.
And that’s before any additional earnings from mileage! Think about it as earnings that you could miss out on.
Optimize your listings and your rates today. Visit your Fleet Overview page to review and adjust your rates to make sure that you’re setting competitive prices for today’s market.