Skip to main content

Welcome to PREXA365 – Canada (Head Office) | US | UK | Dubai | India

sales@prexa365.com +1(905)917-0365 +1(888)339-5772
Back to Glossary

Markup %

Markup % is the percentage added to the base cost of an asset or service to determine the final rental or sales price.

Key Details:

For equipment rental businesses, Markup % is the primary lever for ensuring that your daily rates not only cover direct operational expenses – such as maintenance, depreciation, and logistics – but also contribute a healthy percentage of gross profit to the company’s bottom line.

  • System Category: This financial parameter is configured within the Price List and Quote modules, often applied automatically to serialized assets, bulk items, or third-party service offerings. 
  • Cost Recovery vs. Profit: Unlike a margin, which is calculated based on the selling price, markup is calculated as a percentage of the cost. For example, if it costs $100 to maintain and transport a unit for a day, a 50% markup sets the rental price at $150. 
  • Dynamic Adjustment: Rental managers often apply different markup tiers based on asset age, seasonal demand, or customer type. High-demand machinery or specialized equipment may carry a higher markup, while long-term contracts for corporate accounts might utilize a tighter, more competitive markup strategy. 
  • Margin Guardrails: Setting a minimum markup percentage protects your business from accidental losses. The system can be configured to alert or block sales reps if a manual discount drops the final quote below the approved markup threshold, ensuring every contract remains profitable. 

Use Case Example

A rental company decides to sub-rent an auxiliary lighting rig from a local partner to satisfy a surge in event demand. The procurement cost to rent that rig from the partner is $500. To ensure the rental yard earns its target profit while accounting for handling, insurance, and the administrative effort of managing the sub-rental, the manager applies a 40% markup, setting the final client price at $700. 

Defining these targets consistently is critical to long-term scalability. Balancing competitive pricing with sustainable profitability is a core strategy detailed in the guide on how to price your equipment rentals for maximum profit, which explores how to align your markup structures with market demand and operational costs. The system instantly applies this markup the moment the procurement agent adds the sub-rented item to the client’s Quote, ensuring no manual calculation errors occur and every transaction contributes positively to the monthly revenue targets. 

 

Close Menu