Having the right pricing strategy is important for your carsharing business on Tarlen.
There are a couple of ways to do this. A strategy some hosts use is to compare prices with major rental agencies like Hertz and Avis and list their cars 5 – 10% lower.
This works because the big car rental giants have access to market data and advanced tools to make pricing decisions.
But as a host on Tarlen, your unfair advantage is in your knowledge of the business fundamentals.
TLDR;
◦ Quick pricing method: Do market research by checking major car rental agencies. Then set your daily price 5 - 10% lower.
◦ Cashflow basics: Understand your fixed costs (loan, insurance, registration) and variable costs (cleaning, maintenance and service) to find your break-even daily rate. Add a 40 - 50% profit markup to keep your business cashflow positive.
◦ Real example: A 2021 Renault Kwid needs at least R480/day to stay profitable with typical operating costs
◦ Smart buying strategy: Purchase 4-5 year old vehicles to avoid the largest depreciation. Sell after 3-5 years when the vehicle still holds some value.
◦ Cash vs. loan trade-off: Paying cash gives higher absolute profits and more pricing flexibility. Buying with loans offer a higher ROI percentage and faster fleet scaling opportunity.
Download the tool, enter your loan repayment amount and other operational cost to see what the best price for your vehicle is.
Download templateGenerating positive cashflow
At Tarlen, we’re not just helping you rent your vehicle out, we also want to help you grow into great business owners.
An important part of being a good business owner is understanding your finances. This helps you make smarter decisions, like which vehicle to buy and how to set the right price for it.
There are 2 important numbers to know before you decide on your daily price:
- Your business cashflow.
- Return on investment or ROI (Long-term Profit)
What is cash flow
💡Cashflow is the money moving in and out of your carsharing business. It calculates how much revenue comes in and how much is left after expenses
Cashflow can be positive or negative:
- Positive cashflow: More money is coming in than going out.
- Negative cashflow: More money is going out than coming in.
Your aim when you set your daily price should be to get a “Positive Cashflow” every month.
Set it too low, and you won’t cover your costs. Set it too high, and you risk losing bookings.
To get it right, we must first figure out the operating costs of your carsharing business.
Fixed cost in your carsharing business:
These are costs you incur whether or not your vehicle is rented:
| Item | Description |
|---|---|
|
Loan/lease repayments |
Monthly payment, if your vehicle is financed. Zero if you paid cash or the loan is fully paid. |
|
Insurance |
Liability + comprehensive insurance. Should include commercial rental coverage. |
|
Registration + licensing fees |
Annual traffic office fees for license disc registration and renewal. |
Variable cost in your carsharing business:
These costs depend on how often your vehicle is used. Many hosts underestimate their variable cost. To be safe, add a 10 – 15% buffer.
| Item | Description |
|---|---|
|
Cleaning & detailing |
Cost to clean the vehicle between rentals. Could become fixed if you use a monthly subscription car wash. |
|
Maintenance & servicing |
Oil, brakes, tires. As the vehicle gets more use, wear and tear increases, so does the frequency of maintenance and service. |
|
Your time |
Time spent managing bookings, vehicle hand offs and cleaning coordinations. |
Cashflow calculation:
Once you know your fixed and variable costs, you can calculate the break-even daily rate. Then we can add our profit mark up to give your actual daily rate… The daily price needs to generate positive cashflow.
Example - Let’s calculate the Cashflow on a 2021 Renault Kwid
Let’s consider an automatic 2021 Renault Kwid listed on Tarlen. Assuming the vehicle is rented out 20 days out of 30 days of the month.
- Loan repayment: At the time of writing, an automatic 2021 Renault Kwid costs roughly R 120,000. If the owner made a 20% initial deposit, for a loan with an interest rate of 10.5%. We’re looking at a monthly repayment cost of R2,063 over the next 60 months or 5years.
- Insurance: Commercial insurance covering 3rd party rental would cost anywhere between R2,000 per month.
- License disc registration and renewal: R1,500 per year or R125 per month. (1500 ➗ 12)
- Cleaning: Each booking is typically 3days long. That’s approximately 7 bookings per month. If we’re cleaning before each trip, and it costs R100 each time, we’ll be spending R700 per month.
- Maintenance: An average of R1,500 per month. (It’s good practice to always set aside some part of your carsharing income for maintenance)
Average operating cost per month: R6,388
Break-even daily rate: R319.
With 50% profit markup: R480 → This is your daily rate.
To maintain a positive cashflow, you can’t go below R480/day.
In slow winter months, aim for around R480. During busy seasons, you could increase your rate up to R580 if the market supports it. Checking prices from major rental agencies can give you a good sense of current market trends.
As Tarlen grows and gathers more data, we’ll provide a pricing guide directly in the app to help you optimize your pricing.
💡 Paying cash: Buying your car cash means no loan repayments and a lower operational cost. This helps improve your cash flow and makes it easier to price competitively in the marketplace.
Disclaimer: While we used real figures in our calculations, Tarlen, its employees, and partners are not responsible for any loss or miscalculations that may arise. All calculations provided here are guidelines and should be used as such. They do not account for your unique situation, monthly expenses, or other factors that should be considered when planning. Your actual earnings will depend on your vehicle’s availability, the price you set, local demand, and seasonal market fluctuations.
ROI (Long-Term Profitability)
Cash flow keeps your business running month to month, but your return on investment (ROI) shows whether the business is truly worth it. It’s a way to compare your profit against your initial investment.
If you’re sharing your car as a hobby and you’re not focused on profitability, ROI may not matter much. But if you’re building a real carsharing business, understanding profitability is important.
To calculate your return on investment (ROI), there are a few other factors to be taken into consideration:
- The depreciation of your vehicle.
- Resale value, when you decide to sell your fleet.
Depreciation:
Unlike land, cars are depreciating assets. Depreciation means a loss in value. And while that loss doesn’t affect your day to day cash flow, it affects your final ROI calculation.
Average depreciation rate on cars:
- 0–6 years old: 15–20% annual depreciation
- 6–15 years old: 5–7% annual depreciation
We strongly encourage our Hosts to buy cars that are at the end of their highest depreciation period.
Vehicles around 4–5 years old are in that “sweet spot”. Their highest depreciation has passed, and the depreciation curve is starting to flatten. (See depreciation curve above).
Cars at this age are still in great condition for rentals and can command the same daily price as a new car.
Resale Value:
A smart practice is to sell after 3–5 years and replace it with another 5-year-old car.
This keeps your carsharing fleet fresh and ensures you get a good return on the sale. At the 8–9 year mark, the vehicle is older but hasn’t yet lost most of its value.
The amount you get from selling your car contributes directly to your ROI, so don’t leave it to chance, plan for it.
Calculating your ROI after 5yrs:
Using the Renault Kwid in the example above:
Assume the host decides to sell her Kwid after fully paying off the loan, around the 60-month (5-year) mark.
- If the car is consistently booked out 20 out of 30 days each month for the past 5 years, the total booking revenue would be: R576,000
- Total costs over 5 years, including loan repayments, insurance, license disc, cleaning, and maintenance: R383,280
- Resale value at 5 years: R90,000
- But her initial investment (her deposit): R24,000
This shows that after investing R24,000 upfront as a loan deposit, by year 5, selling the car allows her to realize a profit of R282,720, or 11.78× return on her initial investment.
But what if she bought the Renault Kwid cash upfront:
- If rented consistently 20 out of 30 days each month for 5 years, the total booking revenue remains: R576,000
- Total costs (insurance, license disc, cleaning, and maintenance) drop to R4,325 per month without a loan, totaling R259,500 over 5 years
- Resale value after 5 years: R90,000
- Her initial investment (which is the full cost of the vehicle): R120,000
This shows that after investing R120,000 upfront on the vehicle, by year 5, selling the car allows her to realize a higher net profit of R406,500, but lower ROI of 3.39X on her initial investment.
Pros and cons of buying cash
| No | Pros of buying cash | Cons of buying cash |
|---|---|---|
|
1. |
No monthly loan repayments → higher cashflow each month. |
Large upfront capital required (R120k). |
|
2. |
More competitive on price (can undercut loan-funded hosts). |
ROI percentage looks smaller (339% vs. 1178%). |
|
3. |
Lower financial risk if rentals dip (no bank chasing repayments). |
Money is tied up in a depreciating asset that could have been invested elsewhere or in deposits for more vehicles. |
|
4. |
Higher absolute net profit after 5 years (~R406k vs R283k). |
Slower path to scaling fleet (limited by your own cash). |
|
5. |
Simpler to manage, no loan admin. |
|
Pros and cons of buying with a car loan
| No | Pros of buying with loan | Cons of buying with loan |
|---|---|---|
|
1. |
Lower upfront investment (only R24k deposit). |
Lower cashflow every month (loan repayment eats margin). |
|
2. |
Lower initial investment boosts ROI on your initial investment dramatically (1178% over 5 years). |
Higher financial risk: repayments will always be due even if rentals are slow. |
|
3. |
You have more cash for multiple cars → so it’s easier to scale the fleet quickly. |
Loan interests will reduce your overall net profit (In the examples above R282k vs R406k cash). |
|
4. |
Inflation works in your favor: repayments are fixed, but rental rates can rise over time. |
Pricing flexibility is lower (need higher rates to cover repayment). |
Moving forward
At the end of the day, your daily price isn’t something you set once and forget. Start by understanding your business costs, then add a safe profit margin to keep your cash flow positive.
Next, study the market and adjust your price based on trends and seasonal demand.
If you’re buying a vehicle specifically for your carsharing business, consider the risks and rewards of buying cash versus taking a loan to grow faster. This will help you avoid the trap of pricing too low or too high.
The winning strategy for you might not be the same as for another host, as every host has their own goals and risk appetite. Your real advantage comes from understanding the fundamentals.
Pricing tool and financial planning template
- Pricing tool,
- A financial planning template.
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