Can’t decide whether to rent or sell your products and services? Both business models offer unique benefits to materials-based organisations, but trying to identify the most suitable path to take can be difficult. Every industry is unique, so your decision should be based on how the pros and cons stack up against your clients’ needs. Choose wisely by taking the following points into consideration.
The Pros of Renting
Maintaining ownership over your business’s assets is one of the greatest benefits associated with renting. Instead of being dependent on suppliers to replenish stock, hiring out your materials will make managing inventory less stressful and more cost effective. It might not be the most conventional way of doing business, but organisations like Maybe Hire have proven that it can be done successfully.
Renting also makes it easier to earn loyalty. Having continual contact with your clients will give you the opportunity to build important working partnerships. Even if you only interact every few months, regular communication is a great way to establish trust.
The Cons of Renting
Renting can make modernising your business a little tricky. Stocking the most up-to-date materials is essential these days, and you may have no choice but to regularly upgrade your entire inventory in order to stay competitive.
Having to deal with repair costs is another potential disadvantage associated with renting. Even if strict conditions apply to when the items must be returned, operating a rental business involves an element of risk. Accidents happen, and if a client damages or misplaces one of your products, you may end up losing not only money, but also your ability to keep up with supply and demand.
The Pros of Selling
The best thing about the buy-and-sell model is how simple it is. With no rental contracts to draw up or unreturned products to chase down, you can get on with running your business. It takes the hassle out of bookkeeping too, allowing you to keep track of expenses more easily.
Selling also puts you in a position of power when it comes to handling damaged stock. After a transaction has taken place, the customer is responsible for any damage their product sustains, whereas renting unavoidably shares this responsibility between the client and the supplier.
The Cons of Selling
There’s certainly nothing wrong with selling clients a quality product, but it can limit their dealings with your business. Once you’ve sold a client the materials they require, their needs will have been met and you may never hear from them again.
Selling can also make it more difficult to implement competitive pricing. Rental companies generally operate with lower costs, so they can be more flexible with how much they charge. Sellers may need to charge a slightly higher price to ensure turnover.
There’s also the problem of competition. Renting offers a strong point of difference, whereas selling is nothing out of the ordinary.
Keeping these factors in mind will help you make an informed decision when it comes to choosing which way your business should go. As long as you’ve taken your industry, clients and competition into consideration, you’re bound to choose the right business model.