Every rental business that owns identical units, whether party tents, kayaks, scaffold sets or camera bodies, faces the same quiet decision each time it buys one. Too few and the busiest days turn customers away. Too many and units sit in the shed earning nothing while their insurance, storage and depreciation run. The honest way to see the trade-off is a curve: the yearly profit of owning one unit, two, three and so on. It rises, peaks and falls, and the peak is where to stop.
Open the free fleet size optimizer
The first unit is out almost every day there is a request. The tenth is only needed on the days when nine others are already out. Those days are few, so the tenth unit is rented a handful of times a year, while it costs exactly as much to own as the first. Demand also comes in seasons, which makes it worse: a fleet sized for the summer peak is mostly idle in the off-season. The useful number is the extra profit of the next unit, and the right fleet is the largest one whose next unit still earns more than it costs.
An invented party-tent business gets 2.4 rental requests a day for 150 peak days, 1 a day for 61 shoulder days and 0.15 a day for the 154 days of off-season. Rentals last one day (25 percent of them), two (45), three (20) or seven (10), an average of 2.45 days. It charges $85 per tent per day, spends $18 on cleaning and delivery per rental, and each tent costs $1,100 a year to own. All of these figures are invented for the example. Treating bookings as arriving at any hour, the Erlang loss formula gives:
| Tents | Turned away | Profit per year | This tent adds |
|---|---|---|---|
| 6 | 21.1% | $60,021 | $5,902 |
| 8 | 9.4% | $67,764 | $3,219 |
| 10 | 3.2% | $70,779 | $994 |
| 11 | 1.7% | $70,972 | $192 |
| 12 | 0.8% | $70,602 | −$370 |
The sixth tent adds $5,902 a year. The eleventh adds $192, and the twelfth costs $370 more than it brings in, so the best fleet is 11 tents. Notice how little is at stake near the top: the profit at 10, 11 and 12 tents is within about $400 a year, so the choice among them can safely be made on things the model does not see, such as your cash or your storage space. Notice also what a unit must earn: at $85 less $7 of per-rental cost spread over the average rental, a tent needs about 15 rental days a year (14.2, rounded up) to cover its $1,100.
If the same business books by calendar date, so that a tent returned on Friday can go out again on Friday, a simulation of 200 years gives a slightly lower best fleet of 10 tents, because fewer requests are turned away at every size. The tool computes both and uses the one that matches how you book.
The optimizer does steps 4 and 5, and it also shows what a bad year (one in ten) looks like and what a limit on turned-away customers would cost.
Only if a unit earns its yearly cost on the days it is out. A unit bought for the busiest weekend is rented only on the few days when everything else is already rented, so it needs a very high rate on those days to cover twelve months of owning it. Work out the rental days a unit needs in a year to break even, then compare it with how many days the last unit would really be out.
For the any-hour model only the average matters. For the day-by-day model the mix matters a little, because many short rentals free units sooner than a few long ones, but the average is still what drives how many units are out at once. Enter your real mix if you know it and a single average if you do not.
Utilisation is not profit. A unit that is out 146 days a year at a margin of about $78 a day earns about $11,300, so it pays a $1,100 owning cost many times over. A unit out 10 days earns about $780 and does not. The tool compares the days the next unit would add with the days it needs.
Pricing a single rental rather than sizing the fleet? The bounce house rental calculator prices one rental job and shows what it earns.