Why Your Rental Website Needs Adaptive Rental Pricing?

Have you ever wondered why consumers are shifting to online rental businesses? Not only are those businesses flourishing, but also gaining recognition in the online market. In North America, online rental startups and even brick-and-mortar stores with a rental website are doing significantly better than traditional businesses in terms of revenue and growth. 

However, going online also means entering into fierce competition where you directly compete with incumbents and nascent funded businesses. Taking advantage of such a scenario becomes difficult if your rental solution lacks important capabilities. After all, the digital journey comes down to more than just demand; it’s about digital adaptability, and features like diverse pricing models and invoicing capabilities are a must.

The primary reason behind the consumer shift towards rental is eco-friendliness and cost-effectiveness means of product ownership. In some niches, such as EV rental and equipment rental, consumers prefer to rent over buy because of simple cost-effectiveness. Thus, it has become a necessity to offer lucrative pricing and follow fair pricing strategies. 

Adaptive pricing of Yo!Rent is a rental pricing algorithm that helps you implement fair rental pricing for long-term rentals and offer better value to customers.

What is Adaptive Rental Pricing?

To get a better understanding of segmented rental pricing, it is essential to understand how tiered pricing works.

In tiered pricing, rental solutions allow rental businesses to define and levy charges for multiple interval periods, for example, daily, weekly, and monthly rentals. By introducing incremental discounts for increasing rental terms, businesses can attract more customers. 

However, the tiered pricing models follow standard rental pricing algorithms and fail to offer a genuine price to customers. They mostly perform rental pricing calculation by taking just one variable, which is either the daily, weekly, or monthly price, and cannot process mixed rental intervals.

Let us understand with the help of some examples. 

Example 1: With Standard Rental Pricing Algorithms Daily rental fee: $10 Weekly rental fee: $60 (10% discount)Monthly rental fee: $255 (15% discount) Rental Duration: 2 Weeks Taking the aforementioned tiered pricing as reference, the cost for a 2-week rental is: = Weekly rental fee x 2= $60 x 2 = $120

The price calculation here is correct and offers genuine pricing to the customer, who also receives the appropriate discount.

Example 2: With Standard Rental Pricing Algorithms Daily rental fee: $10 Weekly rental fee: $60 (10% discount)Monthly rental fee: $255 (15% discount) Rental Duration: 10 days With the daily rental fee:  = Daily rental fee x 10= $10 x 10 = $100 Here, the invoicing is correct, but the customer might feel cheated as the user who rents out a product for 7 days gets a discount of $10, but for renting the product for 10 days, the system does not levy any discount. With the weekly rental fee: As standard rental pricing algorithms cannot process mixed rental terms, the system will round off 10 days to 2 weeks by default. = Weekly rental fee x 2= $60 x 2 = $120 In this scenario, the pricing offered is still not genuine, as the customer also has to pay for the remaining 4 days.

With Adaptive Rental Pricing:

Adaptive rental pricing fixes the issue by processing multiple rental terms all at once. Meaning, instead of rounding off 10 days to 2 weeks, it calculates it as 1 week and 3 days. Similarly, adaptive rental pricing calculates 40 days as 1 month, 1 week, and 3 days and offers genuine pricing to customers.

Example 1: With Adaptive Pricing Algorithms Rental Duration: 10 days Adaptive pricing can process mixed rental terms and thus breaks down 10 days into the following: 10 days = 1 week + 3 days Rental Price Calculation: = (Weekly rental fee x 1) + (Daily rental fee x 3)= ($60 x 1) + ($10 x 3)= $60 + $30= $90

Here, as the system used adaptive pricing, it was able to break the rental duration into weekly and daily rental terms. The customer finds this pricing genuine as he gets the same discounts as weekly rental customers and also does not have to pay an additional amount for the remainder days.

Example 2: With Adaptive Pricing Rental Duration: 40 days Adaptive pricing: 40 days = 1 month + 1 week + 3 days = (Monthly rental fee x 1) + (Weekly rental fee x 1) + (Daily rental fee x 3)= ($255 x 1) + ($60 x 1) + ($10 x 3)= $255 + $60 + $30= $345

Here, the $345 rental fee appears to be more genuine and cost-effective to the customer than all other calculation methods. It provides the customer with all applicable discounts and also does not include any remainder days’ charge.

	With Adaptive Pricing	With Standard Pricing Algorithms
		Daily Rental Charges ($10)	Weekly rental charges ($60)	Monthly rental charges ($255)
Rental Duration	40 days	40 days	40 days	40 days
System calculates As	1 month + 1 week + 3 days	40 days	6 weeks	2 months
Total Invoice	$255 + $60 + $30 = $345	$10 x 40 = $400	$60 x 6 = $360	$255 x 2 = $510
Additional Days the Customer Pays For	0 days	0 days	2 days	20 days
Fair Pricing	✔	✘	✘	✘

Benefits of Integrating Adaptive Rental Pricing

There are multiple ways a rental business can benefit from adaptive rental pricing:

• Pricing Clarity & Accurate Cost Estimation. Adaptive pricing can help you provide more clarity to customers and give accurate cost estimations for varying rental durations. As the demand for transparent pricing policies increases, adaptive pricing offers a practical way to offer fair and just pricing.

• Pricing Automation: Manually generating invoices can be time-consuming. Not to mention, it defeats the purpose of having a rental website in the first place. Adaptive pricing automates quotations even for long rental durations.

• Lead Generation: Without adaptive pricing, it can be difficult to acquire big-ticket leads who rent bulk products for long rental durations. By offering them a fair price, you can form long-term relationships and grow your business. 

• Competitive Differentiation: Adaptive pricing can help you stand out from the rest of the competition, whose rental pricing works on daily, weekly, or monthly pricing algorithms. Despite having tiered pricing, they may fail to offer a genuine price, which you can easily provide.

• Customer Loyalty & Retention:  Offering price transparency is an important aspect of building trustworthiness. With lucrative pricing and payment structure, you can increase your brand loyalty and increase repeat customers.

How Yo!Rent Helps?

Being the most advanced rental software available in the market, Yo!Rent provides diverse pricing features to rental businesses. To begin with, it supports both rental and sales operations, and also has a Request for Quote (RFQ) module to accept custom price quotation requests from customers. Along with tiered daily, weekly, and monthly pricing, Yo!Rent offers adaptive pricing to help you stay competitive and establish trust. Adding on, to help you generate leads and cross-sell/up-sell products, Yo!Rent has several features such as hourly booking, rental add-ons, custom rental duration discounts and bulk order discounts. 

Key Reasons to Select Yo!Rent

• Comes pre-integrated with rent plus sales options
• Has both adaptive rental pricing and tiered rental pricing
• Rent-centric features like rental agreement management, returns tracking, security deposits, and document verification
• Comes at a one-time cost for a lifetime
• 100% self-hosted solution providing the option to select a fast and secure server
• Comes with 12 months of free technical support.

Conclusion

Going digital without adaptive rental pricing implies leaving essential growth functionalities on the table and also defeats the purpose of going digital. It leaves pricing automation incomplete on your rental website, which can lead to an unsatisfactory customer experience. With no clarity on the pricing structure, or customers suspecting an unfair pricing strategy on your website, it can get difficult to build brand loyalty and expect repeat customers. In the future, it can also lead to pricing disputes. Thus, by integrating adaptive pricing or selecting a solution that comes pre-built with this option, you can overcome all aforementioned problems and automate end-to-end rental operations.