Rental Consignment Advice

[Thor Wixom]

To current Red owners that are renting your cameras, I need your advice.

I have been talking with a local rental house about doing a rental consignment.

As it sits, the offer is this:

60% of the profit goes to them, 40% to me.

The camera stays at their facitilty, so they can demo it for potential clients.

They will monitor and service the camera as needed during the check-in, check-out process (no major repairs, just the minor stuff).

If anything major goes wrong with the camera that is not covered by a warranty or an insurance policy, I'm responsible for it. Example: This company has flown VariCams on commercial flights. When image sensors are at high altitudes, they are more susceptible to radiation, and in one particular case, a pixel sensor got knocked out by a stray particle during a flight. Now, this is very rare. But it does happen. The company had to replace the sensor block at their cost (it wasn't covered under warranty, and apparently not by insurance either). Panasonic charfed them about $6,000. This is the sort of thing they would expect me to cover if it were to happen.

So, please give me input. Is this a good deal?

Two problems I see... 1) If the camera is always at their facility, how do I know for sure that it isn't being rented more than what they are reporting? (They are about 40 miles away, so I could check in from time to time, but it's still easy to "adjust" the numbers just before checks get cut.) 2) I don't like the idea that the camera may come back broken, and I end up being repsonsible for it.

It seems like I should be in the driver's seat on this one. The agreement should be more in my favor, because I'm the one that took the risk and got an early reservation (as far as I know, they still don't have a reservation).

Now, they are a reputable rental house. I've heard nothing but good about them, but my instinct is to negotiate a better deal.

Redusers, please chime in.

-Thor Wixom

 

[Patric Ralston]

Strike that. Reverse it

Strike that. Reverse it

Hi Thor,

This is my first post. I am a long time lurker:biggrin:

I don't yet have a RED but I do have 12 years in Rental Houses. At the risk of being unpopular :waaa: .....60:40 sounds good if its in your favour (you get 60%). That is the standard deal I have worked with Owner operators. But 60:40 of what? an agreed daily rate? The rate after the rental house has applied a discount to the whole package to win the job?

That said, building a working relationship with a rental house where both sides are happy should be the aim.

To answer your concerns:
1. An arrangement like this is all about trust and you say that the Rental House is reputable (and bad press goes a long way in our industry). If after a while you aren't happy with your return change things.

2. If you are leaving it with the Rental Company it should fall under their insurance cover while its with them (otherwise what happens when someone drops your camera while it is being demoed in house etc?). When it goes out on a job it should be covered by their clients insurance cover.
If it comes back off the job broke then the clients insurance pays. If it comes back to you broke from the rental house it should be under the rental houses insurance.

You might want to have a check in procedure with the rental house when you pick up your camera for your own use.

Good luck.

 

[Michael Stanmore]

I'm working on a similar deal here in Europe... but getting better terms than that. Hold out for better.

 

[Greg M]

50/50 is pretty standard...40% is not a good deal.

"Two problems I see... 1) If the camera is always at their facility, how do I know for sure that it isn't being rented more than what they are reporting? (They are about 40 miles away, so I could check in from time to time, but it's still easy to "adjust" the numbers just before checks get cut.) 2) I don't like the idea that the camera may come back broken, and I end up being repsonsible for it."

If you don't trust them you shouldn't be in business with them. Checking in our your camera should not be required.

 

[Steve Sherrick]

With the way things are right now with cameras hard to come by why don't you just subcontract with them? The rental compnay can get a finder's fee or percentage for passing along the business to you.To me it sounds like you are getting an unfair deal. You put up all of the money upfront for the camera, you are taking the risk if anything major happens to it, and you don't get to use your camera when you want to. That sounds like at least a 50/50 split if not better. Is this camera only a rental item for you or will you also be shooting with it from time to time?

Steve

 

[Michael Stanmore]

With the way things are right now with cameras hard to come by why don't you just subcontract with them? The rental compnay can get a finder's fee or percentage for passing along the business to you.To me it sounds like you are getting an unfair deal. You put up all of the money upfront for the camera, you are taking the risk if anything major happens to it, and you don't get to use your camera when you want to. That sounds like at least a 50/50 split if not better. Is this camera only a rental item for you or will you also be shooting with it from time to time?

Steve

Yeah that's what I'm organising. The rental house I'm dealing with will get a slice of the action for passing someone on to me, but then I obviously have to deal with all the other stuff, like maintenance.

 

[Thor Wixom]

With the way things are right now with cameras hard to come by why don't you just subcontract with them? The rental compnay can get a finder's fee or percentage for passing along the business to you.To me it sounds like you are getting an unfair deal. You put up all of the money upfront for the camera, you are taking the risk if anything major happens to it, and you don't get to use your camera when you want to. That sounds like at least a 50/50 split if not better. Is this camera only a rental item for you or will you also be shooting with it from time to time?

Steve

Steve,

I will also be using the camera. The rental house has agreed that I would be able take the camera whenever I want for my own shoot and/or clients, they just ask that I "get on the schedule" like any other client. Clients that have already booked through them would take priority. I think this is fair, because they don't want to have the rug pulled out from under them and then look like idiots to their trusted clients.

The finder's fee is something I hadn't considered. That's a very interesting idea. If I did that, then the camera would stay with me, and I would deliver it to them for scheduled demos. I would also deliver it one day before their client picks it up, and pick it up one day after. I should also leave 4-5 days contingency after major shoots for over runs on schedule. That should be simple. I'll just book my shoots around it.

Thanks, Steve. Very good advice.

-Thor

 

[Siva Kollipara]

What are normal rental agreements, is it Percentage basis OR is it fixed rate irrespective of the price rental company charges to client(like discounts, short term-higher rate etc)?
Any reputable-trusted rental company references in NYC?

 

[Patric Ralston]

Not sure what "normal" is. But Best for rental company = percentage basis
Best for RED owner = fixed rate, especially when demand is high and supply is low.

 

[Tony Lorentzen]

I'm not 100% sure how the rental business works in the US, but if you live close to the rental place then I'd definitely consider the option Steve is suggesting where you (or someone you trust) deliver the camera to the rental house when they need it and pick it up when they're done. You might be able to talk to them about getting your expenses paid even though they're only demoing the camera to a potential customer. Maybe you could work out a deal with them where you promise them the camera two days a month for demos free of charge in return for their services of promoting your camera? That way you have complete control over when it's out and when it's not. Now - the downside is that you'd have to do all the service/maintenance and (possibly) also the insurance yourself.

If you have to pay for insurance yourself then I'd (at least) take 60% of the rental fee. Remember - if a customer rents your RED from the rental company then they will most likely also rent a lot of other stuff, which is 100% business for the rental company and 0% for you. Consider this: Do you think the rental company would pay you a percentage of their rental business on the basis of business coming "from" the rental of your camera?

Sure - the rental company should have some kind of finder's fee but 60% is waaaay too much (IMHO).

 

[Stephen Williams]

Not sure what "normal" is. But Best for rental company = percentage basis
Best for RED owner = fixed rate, especially when demand is high and supply is low.

Hi,

I would be careful about being greedy, there will be many cameras available to the rental house in a couple of months. If Red rental is a success what is to stop them buying their own Red bodies & blowing you out.

Stephen

 

[Dalibor Fencl]

Hi,

I would be careful about being greedy, there will be many cameras available to the rental house in a couple of months. If Red rental is a success what is to stop them buying their own Red bodies & blowing you out.

Stephen

You right, but at this moment, and I gues the whole next year, Thor is the master.

 

[Eric MacIver]

Well, I can tell you there are better deals out there. We do an agreed upon daily/weekly/monthly rate that is not affected by discounts, and its much better than 50/50.

We also take full liability for the camera, the only caveat being that if we have to eat a deductible for some bad reason (meaning we have to send a claim to our insurance), we split that at the same rate. But, we do have loss of income coverage as well.

 

[Patric Ralston]

Hi Stephen,

I agree. I'm not advocating being greedy. My original post talked about it being important that both parties are happy. That's how you build a good relationship. I'm just suggesting that having a known rate/income stream can be nice. In the long term you can bet that rental companies will buy REDs if it is a money spinner. Thats what they do ~ rent things.

Before that happens I think it is a good idea to build that relationship.

 

[Thor Wixom]

I'm not 100% sure how the rental business works in the US, but if you live close to the rental place then I'd definitely consider the option Steve is suggesting where you (or someone you trust) deliver the camera to the rental house when they need it and pick it up when they're done. You might be able to talk to them about getting your expenses paid even though they're only demoing the camera to a potential customer. Maybe you could work out a deal with them where you promise them the camera two days a month for demos free of charge in return for their services of promoting your camera? That way you have complete control over when it's out and when it's not. Now - the downside is that you'd have to do all the service/maintenance and (possibly) also the insurance yourself.

If you have to pay for insurance yourself then I'd (at least) take 60% of the rental fee. Remember - if a customer rents your RED from the rental company then they will most likely also rent a lot of other stuff, which is 100% business for the rental company and 0% for you. Consider this: Do you think the rental company would pay you a percentage of their rental business on the basis of business coming "from" the rental of your camera?

Sure - the rental company should have some kind of finder's fee but 60% is waaaay too much (IMHO).

Tony,

Those are all good points.

I'm leaning toward 60-40, with me absorbing the costs associated with demos (transportation, time away from other endeavors, etc.).

Obviously, I can't do demos all the time, so there needs to be a limit. Maybe somewhere between twice a month and once a week. Of course, if they're doing the demos, and I'm just transporting the camera and gear, that's not as bad. I think I could live with once a week.

-Thor

 

[Thor Wixom]

Hi,

I would be careful about being greedy, there will be many cameras available to the rental house in a couple of months. If Red rental is a success what is to stop them buying their own Red bodies & blowing you out.

Stephen

Stephen,

They most certainly will order their own Red. I don't expect this relationship to last longer than about 6 months. In fact, a 6 month term will probably be stipulated in the agreement for the very reasons you mention above.

Also, during that 6 months, they will become known as THE place to go for Red cameras in the local market. In the end, the clientelle will probably stay with them.

The option is not working with them and becoming their competition from the start (my Red vs. their Varicams), but I may not make as much money because no one knows who I am in the local market, and that I have a Red. Word of mouth may not be enough to make up the difference in that short of time.

The definate upside is that I could conceivably make enough from the rental company in that space of time to pay for most if not all of the camera.

Then I don't feel bad about not getting the clientelle down the road, because most of the time I'd rather have the camera at my disposal for my own projects anyway.

These are all good thoughts. Thank you to everyone who has responded so far.

-Thor

 

[BASSAM MSSALATIE]

but I may not make as much money because no one knows who I am in the local market, and that I have a Red. Word of mouth may not be enough to make up the difference in that short of time.


-Thor

WHY you dont try to Advertise your red ? for example plan to make
website for rentals.. some small Adds in newspares ,,etc. and do your own renting house.
:waaa:

 

[Gregory Leno]

I've been talking with rentals houses here as well and the 60/40 split needs to go the other way. 60 for you and 40 for them.

Think about it... you are the one taking the risk here. They aren't putting any money out but receiving the benefit of having it in their rental stable.

Granted, they won't be making as much per day as if it was theirs but they don't have any investment to recover either.


~ Greg

 

[Thor Wixom]

WHY you dont try to Advertise your red ? for example plan to make
website for rentals.. some small Adds in newspares ,,etc. and do your own renting house.
:waaa:

I have thought about that, and I will eventually do it. But the next 6 months could come and go in the time it takes to "spread the word". By the time enough people know about me and my Red, they will have had enough time to put in a deposit and get their own cameras. Some will still rent, though. But I want to maximize my ROI in the first 6 months that I have the camera, before the market is saturated with Reds.

-Thor

 

[Rocco Schult]

If anything major goes wrong with the camera that is not covered by a warranty or an insurance policy, I'm responsible for it. Example: This company has flown VariCams on commercial flights. When image sensors are at high altitudes, they are more susceptible to radiation, and in one particular case, a pixel sensor got knocked out by a stray particle during a flight. Now, this is very rare. But it does happen. The company had to replace the sensor block at their cost (it wasn't covered under warranty, and apparently not by insurance either). Panasonic charfed them about $6,000. This is the sort of thing they would expect me to cover if it were to happen.

Apart from all other aspects, respect this: What you outlined is a "higher force" scenario. Its quite comprehensive that they don't want to cover this, as it has nothing to do with a real use. A pixel could also die down here at one time.
If however, it should be really within a rental use, it shouldbe covered - by them.
(Drilling holes in it etc.. :construction: )