i.Revitalise Pricing Policy
The context for price setting on i.Revitalise first needs to be explained. The price of a shared asset or capacity on i.Revitalise is the opening value set by the Owner for any request at any time. Upon a specific rental request at a certain time and for a certain rental period in the future, the Owner might want to increase its price because the asset or capacity might not be that idle during the requested time period. Therefore, the price may not be set too high from the beginning, because first it is meant to cover for idle time which otherwise raises no money at all and second it might be increased by the Owner upon a specific request if in the meantime he has been able to fill a part of the idle time.
Alternative for investment
An appropriate reasoning for price setting on i.Revitalise is taking into account why Renters come to i.Revitalise. It is because a company's resources are finite, and investments need a certain return. If a company's ROI (Return On Investment) is too low, then i.Revitalise wants to provide an alternative.
What is a low ROI?
To be able to provide a value-adding alternative, i.Revitalise has considered what a low ROI means. A low ROI means that the payback period for the investment is too long. And that depends on the value of the asset, whether it is a Cat 1 (value between 1k€ and 10k€), Cat 2 (value between 10k€ and 50k€), Cat 3 (value between 50k€ and 150k€) or Cat 4 (any asset with value higher than 150k€). We feel that 800 rental days or more than 4 calendar years represents a high payback time for an average 50%-of-the-time utilized Cat 4 asset. Also, access to investment (CAPEX) is more difficult for the more expensive assets.
The magic link between the investment amount and the dayprice
We want the dayprice (DP) to be a percentage (P) of the investment amount (IA) or DP = P * IA. Also, we know that the payback time (PT) equals the investment amount over the dayprice or PT = IA / DP. Putting these two together, we find that our percentage P equals 1/800 for the Cat 4 assets, or 0,125%. That means that for a 200k€ Cat 4 asset, like a Laser Cutting Machine, the dayprice becomes 0.125% of the 200k€ or 250€.
Based on the above calculated basic dayprice, we do some finetuning for two reasons. First to include the operator training cost in case the asset is rented with an operator (a "capacity") and second to reward loyalty for long term rentals. The operator training cost is by default estimated at 50k€ in the investment amount, to be adapted case-by-case, and the reward for loyalty is implemented by a +10% mark-up on the dayprice and a -5% reward on the monthly price. The weekly price in the example becomes 5 working days at 250€ or 1250€ / week, the dayprice 275€ / day and the monthly price becomes 5225€ / month counted at 22 working days.