Chartered Financial Analyst and small business consultant specializing in event services and inventory-based businesses.
How many rentals do you need to book to be profitable? Enter any three variables—Monthly Fixed Costs, Avg. Price per Rental, Avg. Variable Cost per Rental, or Breakeven Rentals—to solve for the fourth.
Party Rental Breakeven Calculator
Party Rental Breakeven Formula
The breakeven formula for a party rental business finds the total number of rentals (Q) you must book each month for your total revenue to cover all your fixed and variable costs.
Q = F / (P – V)
Solve for Monthly Fixed Costs (F):
F = Q * (P – V)
Solve for Avg. Rental Price (P):
P = (F / Q) + V
Solve for Avg. Variable Cost (V):
V = P – (F / Q)
Variables Explained
- Monthly Fixed Costs (F): Your recurring overhead. This includes warehouse/storage rent, insurance, website hosting, and inventory management software.
- Avg. Price per Rental (P): The average revenue you collect from a single rental order.
- Avg. Variable Cost per Rental (V): The costs tied directly to one rental. This includes cleaning supplies, repair/replacement of items, delivery labor, gas, and payment processing fees.
- Breakeven Rentals (Q): The total number of rental orders you must complete per month to reach $0 in profit.
Related Calculators
- Event Venue Breakeven Calculator
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What is a Party Rental Breakeven Point?
A **Party Rental Breakeven Point** is the exact number of rental orders (Q) you must book each month to cover all your business expenses. It’s the minimum sales volume required to pay for your fixed “overhead” costs (like warehouse rent) and the variable “per-rental” costs (like cleaning and delivery).
**Fixed Costs (F)** are your consistent monthly overhead, whether you book 0 rentals or 100. This is primarily your warehouse or storage unit rent, business insurance, website/software subscriptions, and any salaried employee pay.
**Variable Costs (V)** are the costs incurred *only* when you book a rental. This is a critical number to calculate. It includes the labor cost for cleaning and preparing items, delivery driver wages, gas for the delivery truck, and a small amount for wear-and-tear or replacement of items.
The **Contribution Margin** (P – V) is the profit from a single rental that goes toward paying your fixed costs. If you charge (P) $450 for a rental and your variable costs (V) are $100, your contribution margin is $350. This calculator finds how many $350 “profit chunks” you need to cover your total fixed costs (rent, insurance, etc.).
How to Calculate Party Rental Breakeven (Example)
Let’s calculate the breakeven point for a party rental business.
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Identify Monthly Fixed Costs (F):
Your storage unit is $1,000. Insurance is $300. Software is $100. Van payment is $400. Your total (F) = $1,800.
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Identify Avg. Price per Rental (P):
Your average rental order brings in $400.
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Identify Avg. Variable Cost per Rental (V):
You pay a delivery driver $50, use $10 in gas, $15 in cleaning/repairs, and 3% for credit card processing ($12). Your total (V) = $87.
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Apply the Formula: Q = F / (P – V)
First, calculate the contribution margin: $400 (P) – $87 (V) = $313.
Next, divide the fixed costs by this margin:
Q = $1,800 / $313 = 5.75 -
Conclusion:
You must book 6 rentals (rounding up) just to cover your monthly business overhead. The 7th rental, and every rental after, is your personal profit.
Frequently Asked Questions (FAQ)
The initial purchase of your inventory is a one-time *capital expense*, not a monthly fixed cost. You should not include the full purchase price in (F). Instead, you can either depreciate it monthly (ask an accountant) or, more simply, add a small “replacement” fee into your (V) for every rental to account for wear and tear.
You can! If you want to find the number of rentals needed to pay *both* your business overhead AND your personal salary, add your desired monthly salary (e.g., $5,000) to the (F) field. The calculator will then show you how many rentals you need to *live*, not just to break even.
You must use an *average*. Look at your last 10-20 rentals. Calculate the total gas and delivery labor for all of them, and then divide by the number of rentals. This gives you a realistic (V) to use for planning.
Enter your (F) (e.g., $1,800), your (V) per rental (e.g., $87), and a *target* number of rentals (Q) you can realistically book per month (e.g., 20). The calculator will solve for (P), telling you the *minimum average price* (e.g., $177) you must charge per rental to hit your goal.