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In equipment and tool rental companies, utilization is the primary method by which asset performance is measured and business success determined. In basic terms it is a measure of the actual revenue earned by assets against the potential revenue they could have earned.[1] Rental utilization is divided into a number of different calculations, and not all companies work precisely the same way. In general terms however there are 2 key calculations: the physical utilization on the asset, which is measured based on the number of available days for rental against the number of days actually rented. (This may also be measured in hours for certain types of equipment), and the financial utilization on the asset (referred to in North America as $ Utilization) which is measured as the rental revenue achieved over a period of time against the potential revenue that could have been achieved based on a target or standard, non-discounted rate.

Physical utilization is also sometimes referred to as spot utilization, where a rental company looks at its current utilization of assets based on a single moment in time (e.g. now, 9 am today, etc.).

Variations in rental utilization calculations

Utilization calculations may be varied based on many different factors. For example:

Profitability in relation to rental utilization

Utilization in this context is heavily linked to profitability.[3] Low physical utilization may be mitigated by keeping rental rates high, high physical utilization normally justifies keeping rental rates lower.[4] Different types of equipment may also alter the relationship between rates and utilization.[5]


  1. http://constructionequipmentdistribution.com/article-detail.cfm?id=10921486 Utilization is key to rental business
  2. http://www.qualcomm.com/common/documents/white_papers/QUALCOMM-WP-EquipmentRental.pdf Using technology to improve utilization
  3. http://www.cedmag.com/article-detail.cfm?id=10922778 How to improve results
  4. http://www.rentalmanagementmag.com/newsart.asp?ARTID=1509 close correlation between utilization and rental rates
  5. http://www.rentalpulse.com/article.asp?ARTID=6519 How utilization affects profitability
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