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.
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 |
