Reduce depreciation and boost profit in your rental business
Depreciation — the decline in an item’s value over time — is one of the biggest cost factors in any rental operation. Managing it well means sourcing smarter, maintaining better, and making trade-offs based on real data instead of guesswork.
1. Be proactive in sourcing
Depreciation begins before the first rental. Choosing durable, repairable, and trusted brands can make a huge difference in long-term profitability. When buying inventory, ask:
- Does the item hold resale value?
- Is it easy to repair or maintain?
- Is there a secondhand market for it after its rental life?
Many manufacturers even produce rental-specific product lines designed for heavy use, easier repairs, and longer lifespans — a smarter investment than consumer-grade models.
2. React quickly to damage
Small issues ignored today often become big, expensive problems later. Immediate repairs prevent compounding damage and reduce replacement needs. Build maintenance into your operational rhythm: fix now, save later.
3. Use data to make trade-offs
With a commerce operating system like Twice Commerce, you can analyze the impact of decisions such as:
- Putting an item into maintenance vs. keeping it rentable
- Potential missed revenue vs. long-term value loss
- Repair now vs. replace later
For experienced operators, these trade-offs become intuitive — but for new staff or entrepreneurs, software insights accelerate the learning curve.
4. Learn from your first season
Your first season is your data foundation. Use it to identify:
- Which brands and models perform best
- Which items break most often
- How environment affects wear (e.g., gravel roads vs. city use)
When you plan next season’s purchases, these insights help you invest in the right products and reduce depreciation year over year.
5. Durability pays off twice 😉
Durable and repairable rental models not only lower operating costs — they also hold resale value at the end of their lifecycle. Consumers increasingly look for secondhand rental gear because they know it’s designed to last.
By investing in repairability and long-term durability, you’re not just cutting depreciation — you’re creating resale value that keeps paying back.
Karri: What can we actually as a rental operator, what can we do to make our business maybe a little bit better? So let's start with depreciation and the cost sides.
Tuomo: Yeah, I think these are things where you can again be proactive and reactive. Now, proactively, you can do a lot of—you can affect depreciation, I think in my opinion, quite a lot in your kind of sourcing and purchasing decisions. What kind of brands and what kind of items you end up buying? Do you buy and rent out items that hold their value over time? Are they durable? Do they tend to break down or are they easy to repair? Is the brand such that even as a secondhand or refurbished sale, there is a market for that? Or is it such that after the actual rental usage, it kind of becomes spare parts or in the worst case, just recycling material?
Tuomo: So these are the things where proactively you can affect the depreciation quite a lot — what kind of depreciation curve you kind of assume for the item. At least, if not always in a pure accounting measure, but as a concept of how much value will this item hold over time.
Tuomo: Now, reactively, there are of course these things where we again start to go into the idea that, alright, if it's repairable and composable, do I have some spare parts inventory that I can use with this item? Can I kind of repair them on the spot or inspect them on the spot? So again, depending on the product that you're renting out, but there might be things where a damage fixed now can cost less than same damage fixed two months from this time. So is this something where if left unattended, the damage keeps compounding in a way that now it's actually unreparable?
Tuomo: So I think these are kind of the reactive decisions where you can go into those. Now again, how might a software like Twice try to help you out there is to help you understand the kind of outcomes of trade-offs. So if I now put this into maintenance in order to make sure that this damage doesn't keep compounding, how many orders will I have to refill or in worst case cancel if I don't have a fleet to switch to versus potential lost revenue.
Tuomo: So if you're running your operation on top of a full-blown recommerce OS, understanding trade-offs between decisions should become a bit easier. You're able to see how much potential missed revenue there will be if I put this to maintenance versus keeping it in the fleet, then maybe slightly damaged.
Tuomo: These are the things where I think again, people that have been running a rental business for tens of years, they have it baked in — they have it almost in their DNA. They have so many iterations of these things that they can intuitively make these decisions on the fly. But again, if you're launching into rentals as a new company or you have a new staff member, these are the things that they don't have and it might take them years to learn that intuition. Whereas if you have software in place, then they can get a little bit more support to make wise decisions on the fly.
Karri: So on the maintenance side, it might be once again good to maybe start doing thorough inspections and maybe maintenance beforehand before it actually kind of breaks down completely and then you might actually have to, for example, purchase a new item — so that could be a good way to start once again if you are a new entrepreneur.
Tuomo: Yeah, definitely. And as a new entrepreneur, if you start your first season by having a system in place that allows you to look back to this season later on and everything that has happened, the next season as you're again sourcing for maybe new equipment to rent out, you're a lot more educated on what works for your customers and your environment.
Tuomo: Alright, we're running this bike shop within gravel roads, and there seems to be this one model that really performed really well, and the other one tends to break down for whatever reason. You can go back to the data, you can see that, and you can say that, alright, this season as we're sourcing new models, we're going to focus on these things. This is the qualification that we want to have for purchasing decisions because we know that we need these capabilities for these items to perform and stay in service for the whole season.
Karri: And maybe as a good tip for new entrepreneurs is that a lot of brands actually have completely dedicated lines for rental businesses that might be a little bit more durable or repairable.
Tuomo: Definitely. And there’s a conscious decision made for the product that happens. One thing where I've always been wondering a bit is that some of these rental models mimic quite a lot of the similar kind of consumer products meant to be sold just as it is for one user. And I’ve been thinking — the rental models tend to be maybe more expensive, more durable, and repairable, but these are also capabilities that are probably valued for the owner themselves.
Tuomo: So it's interesting to look into the data and to see that there is this market for the end-of-lifecycle rental fleet. As people know that they are repairable, they're durable — if I change the battery and maybe the tires, it's pretty good. And if I'm okay with a few scratches here and there, it's something that I'm interested in. Just going through the data and looking at what we have in place helps us understand over a long period of time what's the resale value of rentable items for the consumers.