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Equipment Sharing Marketplaces – Eliminate the Risk, Realize the Profits

There are a few major risks business owners face when they own equipment, and as the cost of construction and agricultural equipment rises, it’s becoming more difficult for businesses of any size to balance those risks.

The first, obviously, is being able to pay for it. “Can I afford this?” is a complex question for business owners, but the goal with any piece of equipment is to use it enough to make it worth the price of purchase.

Unfortunately, a lot of contractors purchase specialty equipment for a specific job, and then that equipment sits for months or even years after the job is complete, depreciating, costing thousands each month and not contributing to profit-generating jobs. This is because traditional rental companies may not offer some of the more specialized – and expensive – equipment contractors need to do a job right.

The other risk is whether the equipment will need more maintenance than expected. Even if the equipment is used enough to turn a profit per piece of equipment, the need for maintenance could reclaim those profits in between jobs, or could put equipment out of commission when needed, extending timelines and decreasing profit margins.

The “sharing economy” is beginning to make its mark on construction, however, and equipment owners are recognizing that lending equipment to other contractors can help them cover the costs of ownership and maintenance and generate additional profits per machine.

Traditional rental companies have always been in the business of helping contractors get the equipment they need without taking on the additional risk of owning that equipment. But avoiding a purchase is the only benefit, and rental companies can charge hefty premiums for specialty equipment – if they even have it. Sharing marketplaces make it easier to find specialized machines that project managers may not be able to get from a traditional rental company. By listing their equipment for rent on sharing marketplaces, equipment owners can connect with contractors who need access to a wider variety of equipment and charge their own “premium” to make money while equipment would otherwise sit idle.

Project managers looking for equipment can use sharing economy marketplaces to comparison-shop for competitive pricing on the equipment they need, too. Not only does the sharing economy help them find rentals at reduced costs and avoid making unnecessary purchases, but being able to quickly find and secure the right equipment can also help projects reach completion more quickly, potentially increasing overall profits they’ll see from a job.

Renting brings its own risks, of course, and equipment owners should do their homework before listing equipment for rent to make sure they’ll be able to offset their costs of ownership and maintenance before sending machines out to someone else’s jobsite.

Some sharing marketplaces charge lenders a fee to list equipment. It’s better to list without fees, but owners can keep themselves safe by making sure they rent equipment for a long enough period at the right price so they can cover their monthly payments for equipment, plus maintenance needs, and still turn a profit.

Another network cost that may not be clearly indicated on some sharing marketplaces is delivery charges. Some sharing marketplaces will work with lenders to simplify delivery and others won’t. The best case for equipment owners is to find a network that will help with delivery, making it easier to lend equipment to contractors in more distant locations where demand for specific machines could be higher – netting the owner a more lucrative rental agreement.

Finally, every equipment owner will worry about the machines when they can’t see them. Sharing networks generally do some vetting of renters, so lenders should feel fairly comfortable that their equipment will be in experienced hands. Still, equipment owners should talk with their insurance provider before listing equipment to make sure any damage will be covered. Some rental networks offer their own insurance to protect lenders, which can help simplify the decision to list and will ensure that if something does happen, it won’t eat into profits made from renting or keep equipment owners from doing their own jobs.

Equipment is expensive. The goal for any business is to get the most value for the money spent on equipment, and increasing per-machine profits by getting them to more jobsites is the best way to reduce the risks of owning equipment. For both common and specialty machines, sharing economy marketplaces help lenders widen their per-machine profit margins, making it easier to feel comfortable with the value fleets are bringing into the business.

2 Replies
  1. The “sharing economy” has the potential to disrupt the construction equipment distribution model in a major way. The true test will be to see if Dozr and similar firms can deliver and maintain the equipment at the same level as some of the brick and mortar dealers. The outcome could potentially reshape this marketplace and even have implications on the contracting side as well.

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