Other than the obvious reasons, there are some very compelling reasons to upgrade people into more expensive cars. It costs a car rental company on average 11-45 dollars per day to keep a rental car sitting on the lot unused depending on the car. The smaller and more basic the car, the lower the cost is read this. The 45 dollar cars aren’t in great supply, and the 11 dollar cars are usually more plentiful, so when you average out the daily cost, it averages to around 15-17 dollars per day.
Car renting is an art, not a skill. People seem to think “yeah I’ve done it before, I can do it again, better.” The truth is that very few car renters truly leverage every trick out there to get the best possible deal. Our goal today is to change that.
Now that you know how they get paid, its time to learn how to turn this to your advantage.
Pay attention to the market. If you really wanted that convertible, but they were renting at 75.00 per day online when you booked your subcompact at $40 per day, taking a convertible for $10 a day upgrade is a GREAT deal. Knowing the market will give you a good idea of what is a good deal and what is not. The agents know the market because they see it every day and they have little guides behind the counter to assist them. Attempting to negotiate a good rate is useless if you don’t know the relative values of the cars you are looking to rent.
First, some basics. Car rental agents work on commission. Yes, they get a hourly wage, but they supplement it with sales, or more importantly, up-sells, of products that the car agency sells. This metric, or measurement category, is relayed in the form of a number, Dollars per rental day. To break that down, if you were renting a car for 10 days and they up-sold you from a compact car to a full size car for 10 dollars per day, that agent’s “dollars per day” upgrade number would be $10.00. Each agent is required to maintain a specific dollar amount to avoid sanctions and this number is based on historical averages. Law of averages tells us that 1 in 4 renters will say yes to an upgrade request so long as the upgrade rate is “within normal parameters” for the market. This means that if a car rental for a mid size car normally costs around 30 dollars a day, and the car you are currently in is reserved for 25 dollars per day, if the agent offers you an upgrade between 3-7 dollars per day, the average consumer will say yes 25 percent of the time. Car Rental agencies also, through years of research, that if you raise that 3-7 dollar amount up to 7-15 dollars per day, the average consumer will say yes 10 percent of the time. Simple economics. They have a huge wealth of knowledge on how to do this.
From this, car rental agencies will motivate the agent by putting in tiered commission levels that coincide with the data. If an agent has an upgrade rate of 20% and maintains a specific dollar amount, per rental day, the agent’s payout on that sale will be double what it normally would be otherwise. Depending on where the agent is in their sales numbers, they may need to build up their stats to reach a higher payout level. Some agents may go for top dollar to build up their dollar per day average, other agents go for bulk upgrades and dollar amount is of no relevance to them as they need to build up their average upgrades per rental day.
This is a fixed cost that figures in staff, rent, insurance, finance costs, contracts, internet website, and every other thing that goes into the business. If a car rental company has a fleet of 2000 cars, that means they have a yearly cost of almost 11 million dollars whether they are rented or not. If they knew they had 1800 cars rented, that means they still have 200 more cars worth of daily cost fees to erase, or roughly $3,000 dollars per day.
Take for instance, upgrades. When you rent a specific car class for pickup on a specific day, in reality unless its a specialty car, you are just renting a car, not the specific car class. Let me explain.
Most agents will try and offer an upgrade at anywhere from 10-25 dollars per day for an upgrade. Upgrades could come from any car class to any other car class above. You could go from a subcompact to a full size, a full size to a van, a mid size to a convertible, it really doesn’t matter. They will often quote the same price. Since we know that they really can’t get into trouble, do a little soft negotiating. Statements like, ” I really don’t need a convertible, but I could certainly see myself in a full size car for about 5 dollars a day more….” or “That van looks nice, I can see myself driving that for about 10 dollars a day more than my current rate.” Saying something like that lets the agent know that your interested and to put on their negotiation personna.
Car Rental Agencies spend a great deal of money studying the human mind and how it works. They want to be able to predict what people will do on any given day so that they may best utilize their investment (cars). One thing has shown in these studies is that people are always looking for a bargain, or a perceived bargain. They have it down to a science. The problem is, not all of their agents are as in tune with the game plan as the computers.
If the car rental agency was able to, with the same number of car renters, increase the amount of money they take in, they can offset the costs of the cars that sit on the lot. That is where the upgrades come in. Upgrades, along with additional driver fees, baby seat rentals, GPS navigation rentals, insurance profits, and fuel refuelling charges work to offset the 3,000 per day in costs. So to the average renter, this means that car rental agencies are highly motivated to upgrade and get additional revenue over and above the reserved dollar amounts. As such, really ANY rental agent can offer pretty much any dollar amount they want and they will not get into any trouble for their efforts. In fact, they may be rewarded for having good numbers.