The Truth Behind the "Race to the Bottom" in Trailer Rentals

Justin Martin discusses the 'race to the bottom' in the trailer rental industry, emphasizing the importance of sustainable pricing, education, and professionalism for long-term success.

key topics
Race to the bottom in trailer industry
Importance of sustainable pricing
Educating new operators for industry growth

trailer rental, pricing strategy, industry growth, business education, profitability, market correction, customer experience, industry professionalism

Transcript

SPEAKER_00 0:00

Today, I want to talk about something that comes up almost every single day lately, and especially in the trailer industry, but kind of a lot of industries, but especially in ours, you know, the trailer rental, junk removal, hot shot, you know, roll-off dumpsters, all of it. And it's a specific phrase, and that phrase is race to the bottom, right? You see it everywhere. Somebody posts a trailer rental raid, or somebody says they're hauling junk for a certain price or advertising cheap dumpsters, whatever it is, right? And somebody will post about it, and then immediately the comments start saying things like, Oh, here we go. Oh, it's a race to the bottom. They're ruining the industry. And look, I understand the frustration. I really do, because when you've been in business for years and you've built your pricing around, you know, operational costs, uh, insurance, maintenance overhead, taxes, repairs, downtime, and then somebody pops up charging prices that barely even make sense, that defies logic completely. Yeah, it's it's frustrating. But I also think that there's another side of this conversation that people kind of aren't talking about enough. Like most of these people are not trying to ruin the industry. Okay. Most of these people are not trying to ruin the industry. Most of them genuinely just don't understand the business yet. And honestly, if we're being real here, and and I hope that all you guys are are able to be kind of real yourselves sometimes, a lot of us probably made the same mistakes at the beginning, too. Maybe not the exact same mistakes. I shouldn't say the same mistakes, maybe not the same things, but maybe it wasn't about pricing the trailers quite that lower. You know, almost every business owner has had that phase where they were just trying to get customers through the door, right? Because when you first start something, your brain tells you if I'm cheaper, people will rent from me. On the surface, that sounds logical. You think lower price equals more customers, more customers equals more rentals, more rentals equals success. But what happens is people confuse activity with profitability. Just because your trailer's moving every weekend does not mean your business is healthy. And that's one of the biggest traps of this industry, actually. I think you know, you can stay busy while slowly bleeding money the entire time. And a lot of new operators don't realize that because in the beginning, the money feels exciting. You get a few rentals and money starts hitting your account, and people are calling you and you feel the momentum, but then reality starts showing up. Mosquitoes are getting bad, y'all. Tires start to wear out, you know, lights stop working, brakes need service, customers bend fenders, somebody overloads your trailer, a wheel bearing cooks itself on the highway, insurance renewals hit, registrations hit, taxes hit. Then suddenly you realize, oh shit, I wasn't actually charging enough. And here's the part that people don't want to hear. Sometimes the cheapest customers are also the hardest customers. Now, not always, but a lot of times. They want the most, they complain the most, they take the biggest risks, they beat equipment up the hardest and expect the world from you because they paid you 50 bucks. And meanwhile, you're doing all this extra work for almost no margin. And that's why I always tell people busy does not always mean profitable. And honestly, one major repair can wipe out months of profit if your pricing structure is weak. If your entire business model only works when nothing goes wrong, uh your pricing doesn't work. That's the reality. Now, with that being said, I also think some established businesses handle this conversation way wrong. Okay, and I apologize if this is you. I'm not trying to call anybody out, but I think a lot of us senior guys handle this wrong sometimes. Because sometimes people act like every new person entering the industry is the enemy. And I don't agree with that. It's just, it's just not the case. A lot of us started off doing the exact same thing by mistake or on purpose or whatever. The industry is growing. More people are discovering trailers, more people are discovering junk removal, uh, more people are trying side hustles in general, and more people want financial freedom. So that's gonna happen whether we like it or not. So the question becomes the question becomes do we sit around complaining about new people entering the industry or do we help educate them so they become stronger business owners? Because personally, I think networking and education fixes this problem way better than gatekeeping ever will. If somebody comes into the group charging insanely low prices, and we've all seen it, instead of immediately attacking them, why not explain, hey man, have you factored in tire replacement? Have you accounted for depreciation? What happens when your axle needs replacing? What's your utilization rate? What's your insurance cost? What's your plan for downtime? Because a lot of these people have literally never thought about any of those things before. Guys, they're not evil people, they're just inexperienced. And I think there's a big difference between the two. Now, there are obviously people who intentionally undercut everybody just to try and dominate the market. That exists too. But honestly, a lot of those people don't last very long either. I mean, they pop up a lot and they they they go away pretty dang fast in a lot of cases because eventually the math catches up to every single person that does it that way. The market has a way of correcting itself over time. So people either raise prices, improve service, or they burn out. Right? That's usually what happens. And it's just a waiting game for those types of people to do that. And another thing that I think people need to hear is this if the only reason customers choose your business is because you're the cheapest, that's dangerous. Because somebody can always go cheaper. There's always somebody more desperate. There's always somebody newer, there's always somebody willing to take less. So if price is your only advantage, you're kind of standing on weak ground. The businesses that survive long term usually compete on way more than price, right? They compete on professionalism, communication, clean equipment, availability, convenience, customer experience, reputation, consistency, uh, online presence, delivery options, branding. People pay more when they trust you. That's true in almost every single industry. Name an industry. It's true for that industry. Almost all of them. And uh honestly, some established businesses scream race to the bottom while offering terrible service themselves. So sometimes we have to look in the mirror a little bit. These guys will have old equipment, bad communication, late responses, no branding, no professionalism. Then they get mad when customers go elsewhere. And here's something a lot of people probably don't want to hear. Sometimes pricing pressure is also market correction. It's just reality. Now, to the newer people that are listening to this, okay, I want to give you some genuine advice. Okay, so take note. Don't price emotionally. Don't build your business around desperation, if you want to call it that. Don't assume every month we'll be busy. Don't assume every customer will treat your equipment right. Don't assume nothing will break. You got daddy issues. Build margin into your business before you actually need it because eventually you will need it. All right. And understand this too. Cash flow and profit are not the same thing. All right. A lot of money moving through your account does not automatically mean you're making money. That's one of the biggest lessons that entrepreneurs eventually learn, not just in trailer rentals, but in pretty much any walk of life or any type of business, right? You need sustainable pricing, you need healthy margins, you need reserve money, you need long-term thinking. All right, because uh trust me, things can dry up pretty quick and make you pull your hair out very, very, very, very fast. So otherwise, eventually the business starts owning you instead of, you know, helping you. And for the established guys listening, I'd encourage you to remember what it felt like when you first started too. Most people entering the industry are trying to better their lives, they're trying to support their families, they're trying to build something. And a little education goes a long way because at the end of the day, a stronger industry benefits everybody. More professionalism benefits everybody, more educated operators benefit everybody. Uh, better customer experiences benefit everybody, right? I mean, there's certain industries you know, they just have a bad rep because of how it's been treated forever. Let's not let that happen to our industry, okay? And honestly, the trail industry has a massive opportunity right now. There's room for people to win with this thing, right? But we need more business owners thinking long term instead of just chasing immediate cash. That's the difference between building income and building something sustainable. Anyway, that's my take on the whole race to the bottom conversation. Comment, share your experience, that whole thing. Let me know if it's been happening in your market or did you start out pricing yourself too low? What lessons did you learn? All that kind of stuff. Because I think this is a conversation that the industry genuinely needs to have. And I appreciate you guys listening. And I've told the story a bunch of times. You guys know I started off with my prices being way too low. Now I wasn't undercutting anybody. I didn't make it lower simply because I wanted to get customers. I had no idea, no frame of reference. There was really nobody in my area or even surrounding areas doing trailer rentals when I got started. So when I got started, it was like 100 bucks a day, right? I had no idea. 100 bucks a day. I knew that Lowe's charged like 69 bucks for something that was a little smaller. I know U-Haul had those cheesy little track trailers. I based it off of very limited information. I did like zero research other than like, oh, what's U-Haul charged, right? I didn't do a whole lot. So 100 bucks a day. Well, I kind of didn't change it. And when the business started growing, and then I started noticing by the time I went to take it serious and realized, man, this really, I probably, my market could sustain a much higher amount. I could have higher margins. By that time, I had already kind of set the market and five other people had gotten started, kind of matching my price, and there went the market. So little by little, we've of course adjusted, but it happens. It happens to all of us. We all start off low on price. We start off doing things wrong, whether it's price or the type of equipment we buy or the ways we advertise, whatever it is. So, guys, establish guys, let's cut them some slack, let's educate them, reach out to them. If they seem like they're not receptive to it, try a different approach. Maybe invite them to join our community at Trailer Hustle. Tell them to go and join the Trailer Hustle group. Invite them to join the Trailer Hustle app for free so they can network with people. Let them know, hey, there's more money on the table than what you think, right? So, or tell them they're leaving money on the table, I guess. And for you newer guys, let's be students of our profession. Let's continue to network with the guys that have been doing it a while. We're all here to help one another and gain knowledge and experience together. So reach out to your local guys, talk about what works, talk about what doesn't work, talk about how these people have expanded and how they've grown their fleets and what they did, what were some of the challenges. And if you're getting started or if you're already established, whatever, if you want to have some one-on-one time with me, go to trailerhustle.com and book a consultation. I'm happy to discuss this with all of you guys. I love, I love helping. I hate that I charge for these calls, but I have to filter out the people not taking things serious. I'm really sorry. And it takes a lot of time, energy, and effort to do this thing. And, you know, I don't want people just wasting time. So anyway, don't waste time, guys. Do some research, join the trailer hustle community, and you'll get all your questions answered pretty quick by the amount of experience that's in there. And again, let's cut these new guys a break. All right, let's educate them, let's help them make more money, let's help them become better operators. I appreciate you guys joining me today for this episode. This is a very quick one. Um, thank you guys for tuning into this podcast. It's uh it's pretty cool. Uh, I'm I'm really happy about it. I didn't do the in the office thing because I'm out here working on trailers and doing some shop work and stuff. But I really appreciate you guys sticking around for this. Remember, there's a giveaway happening right now sponsored by the Trailer Spot in the Trailer Hustle app right now for a brand new car hollow that ends July 31st. So be sure to join that. Thank you guys so much. And remember, this is the Trailer Owners Network. This is y'all's network. Y'all built it. Thank you guys so much for being here. Talk soon.