How profitable is an equipment rental company?
how profitable is an equipment rental business_ v1

How profitable is an equipment rental company?

The equipment rental industry is a rapidly growing sector, with the global market size expected to reach USD 120.7 billion by 2027. And, more specifically, the market size, based on revenue, of the party supply rental industry was $6.3bn in 2022.

But what does that mean for your equipment rental business? Because you probably want to know what start-up costs are involved and the potential revenue you can make.

So here are all the financial aspects this blog will cover to ensure you understand exactly what you’re getting into financially when launching an equipment rental business.


1.  Learn rental business profit margins
2.  Calculate your business start-up costs
3.  Choose whether to rent new or used equipment
4.  Boost your profitability using software


Average profit margins per rental business

The rental business is thriving as more and more individuals prefer renting over purchasing. Because we’ve all rented something at some point in our lives, whether it’s a scooter or party supplies for a wedding.

And although COVID-19 changed the equipment rental industry, some industries are still trying to play catch up with the pent-up demand. For example, the wedding industry has returned to 2019 (pre-COVID) levels with approximately 2.1 million wedding receptions. Meaning there’s high demand for party rental items.

In addition, the events industry saw a resurgence in 2022. And as hybrid events continue to grow in popularity, AV and event companies who have knowledge and equipment that can help bridge the gap between online and offline experiences are in high demand.

If you’re about to start your own rental business, you probably want to know how profitable it can be. That’s why we’ve compiled a list of different industries and their average profit margin.

These percentages are industry averages for established companies. If you’re just launching your business, it might take a few years before you reach higher profit margins as you work on establishing your company name. And these numbers also depend on the type of equipment you rent out, your target audience, and frequency of use.

But here are the most profitable rental business industries.


Industry Average profit margin
Party equipment rental 40-50%
Outdoor gear rental 35-40%
Inflatable items rental 30-40%
Wedding and events rental 25-40%
AV rental 20-35%
Kayak rental 30%
Scooter rental 25-30%
Vacation rentals 10%

Understanding the industry landscape will help you make important business choices such as: identifying your ideal customers, selecting the right location for your business, determining how much money you need, and setting financial goals for your company.



How much does it cost to run an equipment rental business?

Say you want to launch a party rental business. When launching a new business, there are always start-up costs involved. From getting permits and insurance to buying inventory.

However, costs will vary depending on the business aspects you have in place, the items you already own, and the objects you still need to purchase. That’s why the average costs associated with starting a party rental business are broad and range from $13,000 to $50,000.

You’ll need a handful of items to successfully launch your party rental business, including:

  • Tents, tablecloths, tables, chairs, cutlery, and dishes.
  • Boxes, packaging, and transport options, such as a box truck, to move large items.

Here’s a full breakdown of the costs associated with launching a party equipment rental business from start to finish:


Start-up costs Average associated price
Setting up a business name and corporation $175
Business licenses and permits $200
Business insurance(s) $1,000
Setting up a website $2,000
Buying items to rent $18,000
Rental space deposit and first month's rent $3,000
Equipment rental software (yearly fee) $960
Truck to transport items down payment (based on a used box truck cost) $7,000
Marketing and advertising (yearly cost) $3,000


Total investment: $35,335


Want to know more about the processes and administration you need to establish your party rental business? Check out our guide, which outlines the exact 10 steps you need to take to launch your party rental business.


Party Rental Business
Photo by Stephen Andrews



What’s best: to rent out new equipment or gently used equipment?

You probably have multiple items, such as larger pieces of equipment, that have been in circulation for a few years, and you’re wondering if you can rent those. Or if you need to purchase all new gear.

The short answer is: it depends on multiple factors and it’s ultimately up to you to choose what you prefer and what you can afford.

The long answer takes into consideration six different factors such as: your budget, equipment condition, item availability, rental terms, project requirements, and risk tolerance. Evaluate these factors to determine which option aligns best with your specific needs and priorities.

It also depends on your industry of operation.

For example: for weddings, items have to be in very good condition. Items in poor condition will reflect poorly on the wedding party and your company. So you’ll want to avoid renting out chairs with chipped paint or stained tablecloths. However, for vacation rentals, slightly used decoration items can blend into their environment. And people are likely to be more forgiving if a decoration item has chipped paint.



How equipment rental software can increase your ROI

Having to manually process and track equipment availability and orders coming in is costly, time-consuming, and increases the chances of errors.

Keep chaos at bay while making your business more efficient and profitable by implementing equipment rental software such as Rentman. Our tool provides you with a centralized and real-time overview of your entire equipment landscape. Ensuring that the right items are available at the right time and that your company doesn’t miss out on bookings.

And you can also easily schedule maintenance and inspection appointments. Thus expanding the lifespan of your gear.

Discover all of the perks of digitizing your rental equipment.



The bottom line

Whether you’re thinking of launching an equipment rental business or expanding your current company’s operations, there are numerous advantages and a hefty profit to be made. And the rental market is constantly growing, with no signs of slowing down in the next few years. So now’s the time to explore your opportunities to increase your company revenue.

And if you’re ready to dip your toes into the equipment rental market, Rentman can support you every step of the way. Our software will help you keep track of equipment availability, send out quotes and invoices based on your planning, and easily process equipment returns.

Want to know more? Explore all the benefits of our equipment rental software solution.


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