How to work out a daily rate that actually covers your costs, why multi-day rates should be lower, and the charges most owners forget until they are out of pocket.
Most small rental businesses set their first daily rate by looking at what the operator down the
road charges. That is a reasonable starting point and a bad long-term strategy, because it tells
you what the market will bear but nothing about whether your vehicle makes money at that
number.
Here is how to work it out from your own costs, and then sense-check it against the market.
Start with the cost of the vehicle sitting still
Before a single booking, each vehicle costs you money every month whether it moves or not. Add
these up per vehicle, per year, then divide by twelve:
Registration and LTO fees.
Insurance: comprehensive, not just the compulsory third-party cover. If you are renting
the vehicle out, check that your policy actually covers that use. Many personal policies do
not.
Depreciation. The uncomfortable one. A rental vehicle loses value faster than a private
one because of the mileage. A rough working figure is what you would lose if you sold it in a
year.
