United Rentals Pricing Spineometer: 2 of 5 Vertebrae

United Rentals, an equipment rental company, had a positive FY 2024. Revenue rose 7.1% to $15.3 billion, and earnings before interest and taxes rose 6.2% to $4.1 billion over the last year.

A review of United Rentals’ 25 April 2025 earnings call and annual report provided insight regarding the importance of pricing on performance.

FACTS FROM EARNINGS CALL AND ANNUAL REPORT

United Rentals rents a wide variety of equipment primarily to businesses. Its industrial and non-construction rentals produce 49% of revenue. Commercial construction rentals produce 46% of revenue. Residential rentals produce five percent of revenue.

Matthew Flannery, CEO of United Rentals, and Ted Grace, CFO of United Rentals, were largely mum regarding pricing, as is common among executives in earnings calls. They did address the potential impact of tariffs, however.

Matthew Flannery commented that he intends to pass on the impact of tariffs, stating, “We probably have to pass it on like happened post-COVID when we all had to enjoy some pretty healthy increases.”

Ted Grace added, “Anytime there’s uncertainty, that tends to favor rental over ownership, and we never advocate for uncertainty. But we are in a period of time where there obviously is a couple of things that the macro[economy] is trying to struggle with. So I’d say at the margin, that’s also gonna benefit rental even more than some of the other advantages we have over ownership.”

VALUE-BASED PRICING FRAMEWORK IMPLIED PRICING REQUIREMENTS

Of the 27,900 employees at United Rentals, industry benchmarks would suggest 31 to 155 would be dedicated to pricing.

1. United Rentals operates a national account program for multi-regional companies with rental spend exceeding $500 K. It is likely that United Rentals negotiates rates with these large customers. If so, transactional price management complete with predictive analytics and incentive alignment would likely produce superior results. Predictive analytics would enable salespeople to negotiate rates within a well-defined range of good, poor, and expected negotiating settlement rates. Incentive alignment would encourage healthy price capture, mix, as well as rental volume.
2. United Rentals offers a wide variety of equipment, spanning temporary structures and forklifts to welding supplies and hand tools. With a wide variety of offerings, rate setting would benefit from moving beyond cost accounting to include market research techniques such as Economic Value to Customer and perhaps primary market research, such as price expectation metrics of Gabor-Ganger or van Westendorp, or price optimization of Conjoint.
3. United Rentals primarily operates in the United States and Canada with a smaller presence in Europe, Australia, and New Zealand. While pricing methodology is best set centrally, pricing itself is likely to vary by region. Price execution distributed regionally would be common for similar businesses.
4. United Rentals has a multi-channel sales model. Along with national accounts, it has a direct sales force, an online rental platform, and a software application for key customers. Channel-aligned pricing policy would reduce unnecessary and profit-destroying channel conflict. This would require tradeoffs in cost to serve, purchasing power, and other factors to optimize overall cross-channel profitability.
5. Competitors of United Rentals are largely fragmented. Competitive price studies would provide basic benchmarks for pricing. It can be expected that some competitors specialize in specific equipment at a lower rate than United Rentals, yet that does not mean that United Rentals should attempt to match them in every case. The value proposition of United Rentals, having a wide variety of well-maintained equipment for multi-regional customers, is different from that of a specialized local rental company. As such, the rates at United Rentals need not be the lowest but simply within the indifference zone to win their focal market.
6. Adverse macroeconomic conditions, such as a recession in the U.S., would materially impact performance at United Rentals. Economic research indicates that 66% of the decline in GDP during a recession in the U.S. is associated with a decline in investment. As United Rentals greatly serves industrial construction and other industrial investment endeavors, its performance is likely to suffer greatly in an economic downturn. Applied economists would be well suited to separate out sales volume changes related to macroeconomic conditions from those related to competitive pricing dynamics. In this manner, United Rentals can constrain pressure for price reductions related to a demand downturn, where lower prices are unlikely to stimulate significant demand, from those related to changes in competitive pricing.
7. United Rentals’ annual report states that they have undertaken a multi-year effort to improve profitability through customer segmentation, rate management, and other efforts. This would imply that the pricing team, or rate setting team, should be in the development stage to the mature stage.
8. The rental of fixed capacity and perishable items may benefit from the use of a price structure based on yield management. With this structure, customers looking for an emergency last-minute rental would pay more than those able to plan ahead for their requirements. While it is doubtful that the entire book of business would need this approach, some of their business would likely benefit from it.

OBSERVED PRICING CAPABILITY

Research into the investment by United Rentals in pricing yielded underwhelming results.

1. The pricing team at United Rentals is significantly below industry benchmarks.
2. Pricing roles ranged from analyst, manager, to director. No Vice President of Pricing was identified.
3. Responsibilities focused on price optimization through analytics and operations. Pricing strategy, price segmentation, and price setting were not identified as the responsibility of the pricing team.

Given the importance and capability of pricing at United Rentals as indicated in financial reports, management statements, and our pricing team research, and given their performance, we have come to the following conclusion as of July 2025.

United Rentals Pricing Spineometer: 2 out of 5 Vertebrae. Executive management understands the importance of pricing, yet despite my expectations based on their multi-year effort to improve profitability, the investment in pricing capability is below expectations. Perhaps a few more years and a more targeted investment would help them get there.

URI (United Rentals, Inc.) rose from 646 the day prior to their earnings call to 664 one week later. FY 2024 revenue of $15.3 billion with a 26.5% operating margin and P/E ratio near 18.

For FY 2024, a 1% improvement in price would yield a 3.8% improvement in operating profits, holding all else constant, at United Rentals.