Rental Margin and ROI: DME Glossary

Two different ways to ask whether an equipment type is worth owning: margin is profit as a share of revenue, ROI is profit as a share of what the equipment cost.

Margin and ROI both start from the same number, revenue minus cost, but they divide it differently, and mixing them up leads to the wrong conclusion about which equipment is actually worth owning.

Gross margin divides that profit by revenue: of every dollar a product earned, how much was profit. It is the standard way to compare product lines against each other on a percentage basis.

Return on investment divides the same profit by what the equipment cost to acquire: for what you spent buying it, how much have you made back. Because durable rental equipment gets rented out again and again, a healthy piece of gear can post an ROI well over 100 percent within a single year, which is the entire point of the rental business model, not a red flag.

Both numbers need two inputs a lot of DME shops do not have cleanly in one place: real rental revenue per product, usually sitting in the accounting system, and what each equipment type actually cost to buy, usually sitting in a purchase order somewhere else. Bringing the two together is what turns "I think wheelchairs do fine" into an actual number.