Assessing Rental Equipment Costs

University:
Stanford University
Course:
ECON 1 | Principles of Economics
Academic year:

2024
Views:

105

Pages:

1
Author:

Waktu S.

Economics of Rental Most off-premise caterers add markups to their cost for rental equipment. Also, most rental companies offer discounts from list prices to cater-ers. This means that off-premise caterers produce profits from rental equipment. To compute the cost of the rental equipment, caterers simply add up the costs of all rental items. Once the rental orders are placed, these costs may be verified with rental companies. For example, let us assume that the list price of all equipment necessary to produce this party is $2,000 and the rental dealer offers caterers a 10 percent discount. Therefore, the cost to the caterer of the rental equipment is How much do off-premise caterers mark up rental equipment? This varies from one caterer to another. All caterers must invest time to order, receive, han-de, rinse or wash, and repack this equipment. On most large parties there will be some small losses of equipment due to breakage, burns, and theft by guests. Smart caterers prefer to absorb these costs in their markups, rather than pass them on to clients directly, which can result in disputes. Novice caterers have been known to sacrifice all of their profits from a party due to equipment losses. Of course, major losses that are due to clients' negligence must be charged directly to clients after the event. Owned Equipment. Off-premise caterers also own equipment which they provide to clients for their events. Some do not directly charge for it, while others charge just as if it was equipment rented from a rental dealer. Many off-premise caterers assist clients by arranging for accessory services such as music, entertainment, flowers, valet parking, security, photography, and wedding and special occasion cakes not made in-house. Some caterers include these services in a package plan, some price them separately, some ask clients to pay these people directly, and some charge markup on some or all of these services. They reason that as the professional who recommends these other services they share some of the responsibility for the results. Additionally, they spend time arranging for these services (and supervise them on-site), and they feel that their expertise in knowing who to recommend is worth something. Therefore, they add a markup when billing clients for these services.