One of the most complicated aspects of the equipment rental business is that of pricing of rentals and the agreements you have with customers (current, prospective, vendors). Imagine a situation where a customer changes a rental asset in the middle of his rental period.
Or if the equipment a prospect customer requires is not available with you, which means you sub-rent it from a third-party vendor and rent it out to your customer. Such a situation can become more complicated when the customer in question is renting for its group companies. The sheer number of agreements, pricing arrangements that you need to make would go up.
At To-Increase, we have customers seeking help in managing their pricing and agreements. Our advice to them is to find the right equipment rental software for all their needs. Your equipment rental ERP software solution can help you at this stage and throw light on how to manage the increasingly complex situation due to pricing and agreements.
How does equipment rental software help you manage rental agreements?
Your equipment rental software will offer a wide range of features and functionalities, proven to be critical for any rental business and its operations, out-of-the-box, including rental agreements.
Image 1: Example rental agreements in DynaRent for Microsoft Dynamics 365
It is well-known in the rental industry, that keeping track of all the ‘special’ rental agreements, that you enter with customers, can be a challenging endeavour. However, once you have an agreement with a customer, this rental agreement can be applied on every rental quote and rental order seamlessly.
Therefore, it is critical to have a system in place which not only allows you to store these agreements in an easy and flexible way, but also proactively derives the applicable agreements for you, when creating a rental quote or rental order.
Your equipment rental ERP can help you with rental quotes or orders. How?
Basically, your equipment rental ERP has a rental agreements feature that holds all the price information details. These price details could pertain to a prospect, vendor or customer; this information is used to derive the right price on rental quotation lines and rental order lines in the process.
This derivation is based on certain elements which can be flexibly chosen during the creation of a rental order, sub-rental order, rental quotation, or sub-rental quotation.
What elements does the equipment rental software use to derive an applicable rental agreement?
- Relation (prospect, customer or vendor),
- Work location (the site where the equipment is to be used)
- Project (internal identification of a rental project for which equipment is rented by a customer)
- Dates (On and expected off-rent dates)
- Currency (EUR, USD, GBP, etc.)
- Status of the rental agreement (confirmed, or not?)
- Product(s) to be rented and the ancillaries used during the rent
What are the different types of rental agreements?
Based on these elements, the equipment rental software will select one of the following rental agreement types. The selection happens during the price derivation to use the correct rental agreement (price list) on the rental quote lines or rental order lines:
- Default agreement (also known as the gross price list)
- Relation agreement (based on prospect, customer or vendor, as selected on a rental quote or a rental order)
- Relation group agreement (based on prospect, customer or vendor, which is used on a rental quote or a rental order)
- Work location (venue) agreement (based on the work location chosen on a rental quote or a rental order)
- Work location (venue) group agreement (based on the work location chosen on a rental quote or a rental order)
- Project agreement (based on an internal project ID chosen during rental quote or rental order creation)
- Project group agreement (based on an internal project ID chosen during rental quote or rental order creation)
- Order or lines agreement (once a price is derived on a rental quote or a rental order, this price can be adjusted—with the appropriate user rights—for the rental quote or rental order lines, thus creating a rental quote or rental order line-specific agreement)
How does an equipment rental software help determine the priority of rental agreements?
The priority of the rental agreement types, and therefore the sequence in which a rental agreement is derived from these rental agreements, can be defined in the rental agreement parameters.
The different types of rental price agreements are:
- Gross price
- Discount percentage
- Net price
- Insurance percentage
- Minimum and maximum quantities
- Transport price (delivery and return)
- Warranty (amount to be paid upfront, which is usually refunded after equipment is returned in good condition)
- Price tiers (The duration of the rental determines the rental price to be paid per period—day, week, month, etc.)
- Transport tiers (The duration of the rental determines the transport price to be paid)
Finally, once you have these rental agreement types as specified above, you can set them at three rental agreement product levels, like:
- A rental agreement that applies to all the rental products in the agreement
- A rental agreement, which applies to a group of rental products in the agreement
- A rental agreement that applies to a specific rental product in the agreement
These are the factors you need to look to help you with your pricing and agreement requirements:
The next steps:
Pricing for rental customers can be a gamechanger and managing rental agreements is a big part of the operations. What you need is the right equipment rental software to help you through the process. Here are some factors to consider:
- Requirements of various stakeholders in your business
- The experience of the solution provider in the rental domain
- The price of the rental solution and the returns
- Sync with ERP to ensure that your operations are updated in real-time
Want more guidance? Our team of experts can help you in this regard.