Rental House Profit Share

[Ty Maier]

Hello,

What is the average split when consigning gear to a rental house? I'm considering purchasing my first Red. I would rent it out as a stream of revenue. Also, is it typical that the gear lives at the rental house or would I just drop it off when needed?

Any experience or advice is very appreciated!

Thanks,
Ty Maier

 

[Erich Roland]

Ty, When I first became aware of a rental operation having this kind of relationship was Abel Cine with Varicam cameras. The deal they offered was 50/50. I have made deals like this before for my company more favorable to the owner at 60/40 (depends on what and when). But the deal will be determined between you and the company based on they're particular needs.

I recommend that before you make your purchase you should try and identify a rental operation that is interested in representing the equipment you'd like to buy. Ive had owners make this offer where I wanted the camera on my shelf, and other offers where I did not want it to stay on premises. Sometimes the result is having a list of local guys who have this camera and who gets the call comes down to the relationship and/or the deal. If its more favorable to the rental house, plus the owner is very responsive and will get me the camera quickly then his name gets called first.

But every rental house is not equal. Each house will have a different take on this concept, and some will not be interested. I can tell you this... that Red products are everywhere and the saturation is extensive. What does that mean? Demand for Red cameras at rental shops is slowing, which translates to needing less cameras not more. This news from my experience and talking to friends at other houses in other cities. But you wont know the answer till you start calling rental houses. Id start at somewhere in the 60/40 arena and see what they say. Maybe push to 70/30 cant hurt to ask. Understanding that a rental house rental price point will be higher then a owner/operators rental price point (ie much higher costs to operate) so your riding the back of a higher priced rental.

 

[Tom Greenberg]

I agree with Erich's assessment. Most rental houses split 50/50 on consignments, but I offer owners a 60/40 revenue split on consigned items. Occasionally we will agree on a split that is even more favorable to the owner, but only if it is a very desirable piece of equipment that I really want to have in my inventory.

Access is everything in the rental business. When we get a call from a client, we need to be able to fill that order promptly and efficiently. Unfortunately, very few people plan far ahead, so those calls are often only a day or two in advance of their shooting dates. And you always have to factor in pickup and prep lead times. What I'm getting at is that it is much more beneficial to the rental house to have your gear live on their premises rather than try to chase you down for those times when they need your camera.

I highly recommend that you talk to the rental houses in your area and see what items they are interested in having before you make your purchase. They might tell you they need something specific that causes you to rethink your plans.