Lifetime Customer Value

When offering clothing rental to consumers, lifetime customer value is crucial; given the likely churn rate of consumers who try for 1-3 months and abandon the service. Retailers could consider reducing this with the implementation of time-based pricing. Variable pricing based on monthly rolling contract or opt-in for a month. You could offer variable pricing based on the duration of subscription with your customer i.e. varied prices for customers who are on rolling monthly contracts vs yearly.

One way to differentiate the annual price offering is to take the VIP approach, offering incentives such as sale previews, holiday month and a host of customer benefits for subscribing to an annual rental membership.


Pricing Strategy

When pricing the rental subscription, an array of factors will come into play. Operationally, renting is set to be more costly than a simple purchase transaction

Many retailers choose to charge 33% of the actual purchase value of goods to the consumer.


Circular Economy

Another factor to consider is the product lifecycle i.e. when do you retire an item of clothing and what happens to it after it leaves the rental chain. Retailers may choose to partner with charities and global foundations to ensure the clothes don't end up in landfill.