It is often hard to be completely objective and determine the rental price for your car just as it should be. We tend to think about how expensive the repairs are, how much time and effort we have invested in it, how much it costs us, how much we spend on insurance, road tax, maintenance etc. Even more important than making stunning car photos (but don’t get me wrong, they are extremely important) is to determine the right price for your car. Very simple advice would be – please set a lower price for the first rentals and then you can increase it when you have your first rentals, feedback, 5 star ratings and good response time. If you want to explore the topic in more detail, please continue reading.
The demand determines the rental price of the car
All economists need to know these basic terms: demand, supply and equilibrium. The demand is the customer desire to buy, and the customers are ready to buy more for a lower price and less for a higher price. The supply is the desire of companies to sell, and companies are ready to sell more for a higher price. The point where the demand and supply meet is called equilibrium.
When determining the price of the car, the owners will want to set the highest possible price, while the renters – the lowest. The owners should set the price as close as possible to the equilibrium, setting it a little higher if they don’t wish to hire out the car too often and a little lower it they wish to rent it out as much as possible.
It is important to understand that it is not your opinion about your car or some car expenses that determines the price, the price of the car is set by the demand! The price is one of the main reasons as to why a specific car is being rented out or isn’t. If you have listed a car but aren’t receiving reservations, it is a signal that the rental price is too high and renters do not want to rent the car for such a price. If you receive so many reservations that you cannot rent out your car to everyone, the price might be too low and can be increased a little. And most importantly: remember that your earnings depend on two things: the price of your car and the number of rentals. By setting a lower price, you might actually earn more because your car is rented out more often.
8 things that influence the price of your car
The price of your car is mainly affected by these things:
1. Age of the car
The older the car, the lower the price. Time flies, so sometimes we forget that our car has just turned 10 or 15 years old. Every 5 years the price of car decreases significantly in car rentals. Cars that are less than 5 years old have a higher price, and it won’t differ so much because their age won’t be the decisive aspect. 5 to 10 years old cars have a lower price, and, in case they cost the same or even more than a 5 year old car, they won’t be rented out because renters can get a newer car for the same price. When cars are older than 10 years, the price are even lower, yet the fuel efficiency, engine and car type become more important. If the vehicle is older than 30 years and has reached retro status, the price starts to increase again, especially during the summer when there is a demand for such cars for weddings and other events.
2. Fuel consumption and engine type
Since the price of fuel is still relatively high, another important things is fuel consumption. If the renters can save on fuel by renting a slightly more expensive car, they will usually choose the car with a lower fuel consumption, so a lower fuel consumption might allow you to increase the price. Also, the engine type is important. Diesel engines are favored more than petrol engines, and cars running on LPG are even more complicated because some people avoid these cars, although they can reduce fuel expenses even more.
3. Car type
Minivans, spacious cars, SUVs, vans, trucks, convertibles and similar cars can have a higher price than regular cars.
4. Car brand and model
The brand and the model are also important. Although most cars are not affected by it, the opinions about some brands can influence the car price. Renters tend to be willing to pay more for German cars since they are believed to be more reliable, while Russian cars, as well as sometimes French and Korean cars are not always seen as trustworthy, so they might require a lower price. However, opinions differ, and each brand has its loyal users and also those who won’t drive it no matter what.
5. Time of the year
Car rental is a seasonal business, since the demand for rental cars surges in April and shrinks in September. If you increased the price during spring and summer, don’t forget to lower it once autumn comes.
6. Car photos
Many things are determined by marketing. If you want your car to be rented out, the car must look great in the photos. Luckily, we have summarised 6 easy tips for stunning photos in our blog! Read them and try it yourself. However, if that still doesn’t help, get in touch with us by writing to info@autolevi.lv and we will help you find a photographer or will help you take photos ourselves!
7. Location
The competition in a certain area might also influence the price of the car. Since there are more cars available in Riga, the prices might be slightly lower because the renters will be able to choose from a wider variety of cars and find cheaper options. But keep in mind that the income level is higher in Riga, so even if the competition in your city is much lower, you need to set a reasonable price that the renters will be able to afford.
8. Insurance and other extras
You can set a higher price if your car has KASKO because it means that the renter takes a lower risk. If the car has any extras, list them in the car description. Extras usually don’t affect the price of the car, but they might help the renter to decide that your car is the right one for him.
Car price in the future
Our team is currently working on a calculator that will suggest the most appropriate price for you car based on several factors, as well as help calculate car expenses and the possible income when renting out the car at a certain price.
While we are still working, we hope that this information will help you! You can also check other cars listed on Autolevi, their price and the number of rentals. In addition, we also suggest to check the price of similar cars in other car rentals, since you are competing not only with other cars on Autolevi, but with other car rentals as well. You can also read about the 10 most popular reasons why a car is rented out, since it might help understand why your car might be rented. Also, don’t forget to include Autolevi’s 25% commission fee in the price, since it used to advertise your car, do all the paperwork, do background checks of users and improve the service. If you have any questions, Autolevi team will be happy to answer them, so call +371 248 709 42 or write an email to info@autolevi.ee .