The primary challenge in the boat rental business is the high competition, especially around famous beaches, lakes, or other tourist destinations that attract a lot of traffic.
New businesses struggle to compete with big businesses as established businesses dominate the market with their cheap rates and high reputation. Plus, they have a large customer base and good reviews.
However, as a wise man once said: Nothing is impossible. To confirm this statement’s validity, we will show you how to price your boats competitively without sacrificing too much of your profit margin.
Step #1: Negotiating the prices before the procurement.
If you initially pay less for boats during the procurement, you will have enough room to price them lower when renting them out.
We already have an extensive post about pricing rental equipment; you can read it here. The guide should show you how to price your rental items effectively, but this post is primarily about pricing your boats competitively.
Here are some of the negotiation tips you can utilize while procuring new boats:
– Never accept the first offer. Instead, give a counteroffer with great determination. The only negative thing you will get out of this action is a simple offer rejection. Be brave and act firmly.
– Ask the supplier to remove the unnecessary accessories to drop the price. Some dealers sell boats with add-ons. Some of those accessories may not be important or suitable for your business model.
– Buy multiple boats in one go and ask for a package deal. Boat suppliers love to sell their boats in bulk. So, they are willing to give a generous discount in those cases.
– Build a warm relationship with boat manufacturers or suppliers and show your eagerness to work with them on a long-term basis.
Step #2: Identify Your Competitors and Conduct a Competitive Pricing Analysis.
In order to price your rental boats competitively, you need to learn how much your competitors charge for the same boats. Study their pricing strategy thoroughly and try at least to match your prices and offer bonuses such as complimentary items and services (e.g., free fishing equipment, binoculars, coolers, etc. This article lists 20 items you can offer in the rental boat business.) or create rewards program to get a competitive edge in the market.
Competitive Pricing analysis is the best way to study your competitors and their pricing strategies in a systematic way and to make informed decisions while pricing your boats.
Here are the crucial points to consider while conducting a Competitive Pricing Analysis:
Identify your competitors and categorize them.
It is the first step because you do not have to compete with boat rental businesses that do not rival your business directly. For example, you should not match your prices with a boat rental company that locates hundreds of miles away from you. Only find and list the ones competing for your target area’s customers.
Gather data on your competitors’ inventory and pricing.
When you collect information from potential competitors, pay attention to the quality of their inventory and availability. For example, some of the guiding questions should be Do your competitors offer the same quality boats for a lower price? Do those companies have enough boats in their stock to keep up with the demands in the area? And other questions that may give your better insides into the local market.
Analyze the pricing.
This step is the most important because once you identify your competitors and gather data on their inventory and prices, you need to analyze to get the most benefits from the data. During the analysis, ask the following questions:
- Do the competitors offer volume discounts? For example, how much discount those companies do when they spend x amount of money or order more than one boat.
- Do they offer bundles? Some boat rental companies keep the rental prices average but offer bundle deals to make their prices attractive. One example is offering a free pass to an island to whoever rents a boat from you.
- Do they have promotion prices? For example, complimentary pricing for new renters or discount deals for returning customers.
Step #3: Develop a Pricing Strategy.
The first thing is first. You should not sacrifice your profit margin too much to beat the competitors’ prices. If you do, you will not be able to sustain your business too long. Making a profit is the primary objective of every business, and without stable capital, businesses are due to immediate failure. That being said, you need to develop a pricing strategy to stand out from your competitors.
Here are some of the pricing strategies you may use.
Be transparent with your customers when pricing your boats.
According to recent surveys, the majority of online shoppers hate hidden fees. So, do not try to hide your hidden fees behind the low pricing. If your competitors take that route, you should refrain from following their footsteps as people inclined towards honest businesses even though their prices are slightly higher.
Introduce seasonal prices.
It allows you to drop the prices when the demand is low and bump up during the peak seasons. For example, there will be few boat renters during the cold seasons compared to summer. Therefore, you can continuously change rates or offer generous discounts based on the season’s lows and highs. We understand that changing prices consistently by hand will be inefficient. But when you use Reservety’s Boat Rental Software, you can assign seasonal prices so the system can change them automatically based on your settings.
Cut the operational costs to reduce rental fees.
We assume you already read our article about pricing your rental equipment. If not, you may read it here. There is a specific formula on how to do it. The formula involves operational costs before coming up with rental prices. For example, suppose you have 20 rental boats in your inventory. In that case, you must distribute operational costs such as utility bills, staff salaries, insurance, office rentals, maintenance costs, etc., on top of each of those boats. If you can save on operational costs, you can reduce the price.
Now the golden question is how to drop the operation costs. Here are some of the tips:
- Streamline and Automate rentals with Reservety and reduce the need for manual labor. More specifically, when you use Reservety, you can automate inventory management, bookings, order management, scheduling, reporting, and much more, thanks to the software’s over 200 features.
- Transition to an online store. Most shoppers now prefer things online. So, you do not have to have a fancy building that is too costly to maintain, considering the high rent and utility bills. Instead, focus on building a professional website that can be accessed through PCs, smartphones, tablets, etc. For example, Reservety provides ready design templates, a 24/7 online booking feature, a live-chat system for real-time communication, a POS system to serve walk-in customers, and much more.
- Reduce errors and maintain your boat on time to avoid hefty repair bills. For instance, boats need consistent maintenance to avoid more significant issues. Unfortunately, some boat renters do not track maintenance records properly, as manual tracking is frustrating and prone to errors. Using Reservety, you can manage your inventories and track their maintenance records more efficiently.
Create Incentives with discounts, bundles, and rewards programs to add value to the current pricing.
Pricing is not the only thing that influences the renters’ decisions. Discount coupons, rewards, and free goodies also play a significant role. Depending on your budget, you can hold promotions from time to time. Some good incentives are:
- Rewarding new and returning customers with discount coupons or redeemable points. Independent of the pricing, these strategies can attract more customers, increase your customer base, and enhance the loyalty of existing customers. You can create points and discounts and distribute them automatically to customer accounts based on their performance by using Reservety.
- Holding promotional events like fishing competitions, beach celebrations, etc., will bring massive traffic and connect your business to future renters.
- Bundling boats with complimentary items. Bundles help you maximize your revenue, and at the same time, it makes your prices attractive.
Step #4: Read Customer Reviews and Feedback.
Revisit your primary competitors’ list and read what reviews their clients leave them. Focus on their strengths and weaknesses, and pay attention to customer comments on review sites. If the customers prefer specific pricing-related things, you can use those suggestions in your pricing strategy. Sometimes, the wisdom of the crowds is far greater than our strategies. Thus, we need to consider what most boat renters prefer when it comes down to pricing. For example, it can be customers’ preference for hourly rates over daily rentals, etc.
You can also implement a feedback system on your website to collect customer opinions about your boat rental business, including their views towards your pricing. However, collecting feedback from each customer will take time if you try to do it manually. But when you use Reservety, you can receive reviews automatically and display them on your website. You can also create particular survey forms and send them to all customers using a single click.
Step #5: Finally, Price Your Boats
In the previous four steps, we discussed negotiating procurement prices with boat suppliers to reduce rental prices. We gave tips on identifying your competitors and conducting Competitive Pricing Analysis. And we also gave tips on developing a pricing strategy and the benefits of incorporating customer reviews and feedback to develop prices that benefit the majority. Now, the final fifth step is pricing your boats.
You can price your boats hourly, daily, weekly, or for any customizable period. We recommend giving customers as many rental period options as possible, as each customer has a unique preference. For example, some may want to rent boats for only a few hours, while others may want to rent them for extended periods.
5 Recommendations to consider while pricing your boats.
- Drop the prices for longer rentals.
It will encourage customers to take advantage of this deal and rent longer, boosting revenues.
- Implement quoting system.
Your boat rental website should have a booking system, which allows customers to select days and hours from a calendar system, and the system needs to generate pricing based on the selection. Doing it manually will be dreadful, but Reservety automates everything.
- Let customers pay in Installments.
This strategy is super convenient for renters with a tight budget and surely gives you a competitive edge in the market. For example, you can set up installment payment plans and collect payments automatically with Reservety.
- Add coupon entry bar.
This simple input field for coupons should be available during the checkout page so that customer can claim their discounts on their own. Luckily, you do not have to look for a special plugin or software to add to your website; Reservety activates it instantly.
- Let the customers create their bundles.
Giving freedom to renters to select accessories and services, along with boats, is convenient for renters and, at the same time, profitable for your business. That way, you are not pushing add-on services and products on a customer’s throat. Instead, you are featuring related items on the checkout pages organically. Also, dropping the prices of individual items under the bundle is essential. For example, price the regular coolers and boat fans at a discount rate when they are bundled with a boat. Creativity is yours. And Reservety equips your website with all the bundling tools and features.
Note
Reservety currently offers 14-day free trials for new users. The sign-up does not require credit cards or long-term obligations. Plus, trials include free premium features and outstanding customer support.
