Profit per car is the revenue from a car's completed rentals, less the costs that car carries.

What is profit per car used for?

Profit per car shows which cars pay for their place in the fleet, and it is the figure behind decisions to keep, reprice, promote, sell or replace a car. In a luxury fleet, two cars can bring in the same revenue and leave very different profit, because one costs far more to finance, insure and service, or because one rents more often.

Read it next to each car's rented days, out of the days it was available:

• Low profit, few rented days: the price may be too high, or renters may not be finding the car.
• Low profit, many rented days: the price may be too low, or the car may cost too much to run.
• High profit, few rented days: the car may earn more with more promotion.

For partner cars, the same figures show whether an owner's rate leaves you enough margin when the agreement comes up for renewal. Decide on several months, not one, since demand moves with seasons and events.

What revenue belongs to a car?

A car's revenue is what renters paid for that car's rental days, counted when each rental is complete. Include the rent and any extensions, after discounts. Decide once how to treat everything else, and apply it to every car:

• Delivery fees, extra miles and fuel: revenue from that rental, and so from that car.
• Damage charges: revenue that should sit next to the repair cost it pays for.
• Deposits: not revenue. A deposit is held against charges, and only the charges taken from it count.
• Taxes, tolls and tickets: not revenue. They pass through you to someone else.

Count a rental in the month it completes, not the month it was booked, because a booking can still be extended, shortened or canceled.

Which costs belong to a car?

A car's costs are the ones that car causes or carries on its own. For a car you own, that means financing or depreciation, insurance, registration, servicing, tires, repairs, cleaning and detailing. For a partner car, the largest cost is usually what you pay its owner, plus whatever the agreement leaves with you, such as cleaning.

Spread costs paid once a year, such as insurance or registration, across the months they cover, so one month doesn't look like a loss. How you depreciate a car for tax is a separate question for your accountant; this guide is not legal, tax or financial advice.

What does a worked example look like?

Here are two cars over one month, for example: a car you own, rented 10 days at $1,200 a day, and a partner car rented 15 days at $800 a day, whose owner is paid $400 a rented day and covers its insurance and servicing.

The partner car made more in the month but less on each day it was out. If the owned car rented more days at its price, it would pull ahead, because its main costs don't grow with each rental. Look at both figures, and at the days each car sat available but unrented. These figures are for illustration only.

Should profit per car include commission and overheads?

Include costs a rental causes, such as the commission paid on it, if you want the car's figure to show what it leaves you. Keep shared overheads, such as the showroom, salaries, marketing and software, out of the per-car figure, or split them across cars by one stated rule, such as rented days.

Either way, say which you did. Profit per car before overheads is for comparing cars; the business's profit after overheads tells you whether the fleet as a whole pays its way.

What mistakes make profit per car wrong?

The usual mistakes are about timing, and about money that isn't yours:

• Counting bookings instead of completed rentals.
• Treating deposits, taxes or tolls as revenue.
• Putting a year's insurance in the month it was paid.
• Leaving out days a car was in the shop, which hides why it rented less.
• Comparing a car that joined mid-month with cars that had the whole month.
• Changing the rules from one month to the next, so months can't be compared.