Types of Subscription Models: Product Rentals

The subscription business model is a business model in which a customer pays a recurring price at regular intervals for access to a product or service.

It’s a common model across many industries — from digital products like software (SaaS), media like newspapers and streaming services, consumables like coffee or food, to physical products such as bikes, furniture, or electronics.

There are many variations of the subscription model, including:

• Product Subscriptions
• Product Rentals
• Product Leases
• Product-as-a-Service
• Subscribe-to-Own (Subscribe-to-Buy)
• Pay-per-Use
• Subscribe & Save
• Membership

This article explains Product rentals — how they work, their benefits, and why more and more businesses are turning to this model.

circuly supports all types of subscription models such as product subscriptions, product rentals, product lease, rent-to-own, membership, product-as-a-service, pay-per-use etc.

What Are Product Rentals?

A product rental is a business model where customers pay to access a physical product for a specific, usually short-term period. Unlike subscriptions, rentals are typically time-bound — customers reserve a product, use it for the agreed duration, and return it when the rental period ends.

Ownership of the product always stays with the business, which can rent the same product to multiple customers over time. This makes product rentals ideal for goods that are expensive to buy, used occasionally, or have high reuse potential — such as strollers, cameras, tools, or sports gear.

Product rental vs. Product Subscription: Is there a difference?

The terms “rental” and “subscription” are often used interchangeably — especially when it comes to physical products. Many people associate subscriptions with digital services like Netflix or Spotify and rentals with tangible goods like cars or tools.

However, the difference between the two lies primarily in duration, flexibility, and customer perception.

Example:

For instance, Grover, known as a tech electronics subscription company, also uses the word rental to describe its offering. In practice, Grover operates as a product subscription — customers commit to a minimum period (usually one month or longer), pay recurring fees, and can renew, upgrade, or cancel at the end of the term. That recurring, time-flexible structure is characteristic of a subscription model.

In contrast, true rentals — like MILES (car rentals) or Boels (tool rentals) — focus on short-term, fixed access, often lasting from a few hours to a few days or weeks. The transaction is time-bound and typically ends with the product being returned immediately after use.

The overlap in terminology often comes down to consumer familiarity and search behavior — people may look for “renting a product” even when the offering technically operates as a subscription.
For businesses, however, distinguishing between the two is important because:

1. Operationally, rentals require more granular tracking (availability calendars, booking windows, quick turnarounds), while subscriptions center around recurring billing and renewals.
2. Legally, depending on the country, rental agreements and subscription contracts may fall under different regulations — especially in terms of cancellation rights, deposit handling, and VAT treatment.
3. Strategically, the pricing, customer experience, and product lifecycle differ — even if the customer-facing message sounds similar.

Examples of Product Rental Businesses

Product rentals have become increasingly popular as customers shift from ownership to access.
Here are some examples of businesses using rental models successfully:

• Strollme (Germany) – offers baby strollers and gear for short-term rental.
• Karüsel (France) – enables parents to rent premium baby and kids’ products.
• Swapfiets (Netherlands) – provides bikes on flexible monthly rental plans with repair and swap services.
• Lizee (France) – powers fashion and outdoor brands to launch rental and resale programs.
• IKEA (Sweden) – has tested short-term furniture rentals for offices and households.
• Grover (Germany) – allows customers to rent electronics like laptops and smartphones monthly.
• Outdoorsy (US) – facilitates peer-to-peer RV and campervan rentals.
• Camerent (UK) – rents professional photography gear on a daily or weekly basis.

These examples show how the rental model can work across industries — from mobility to fashion, from baby products to high-end equipment.

Why Product Rental Businesses Exist

Product rental businesses exist because consumers often have short-term needs they want to fulfill, without the cost, commitment, or responsibility of ownership.

Cars are the most recognizable example. People rent cars for vacations, business trips, or specific needs like moving apartments, moments when owning a car doesn’t make financial or practical sense. Similarly, people rent vans, tools, party equipment, construction machinery, or electronics for occasions when they simply need the product for now, not forever.

Almost any product that fits the narrative of “I need it for a short time,”“I want to try before I buy,” or “It’s too expensive or impractical to own,” can be rented. This shift is fueled by convenience, cost-efficiency, and sustainability, all values that align with modern consumption habits.

Product rentals thrive wherever temporary access creates real value:

• The customer fulfills an immediate need affordably and conveniently.
• The business maximises product utilisation and extends its lifecycle.

Does a Product Rental Model Make Sense for Your Business?

As explained above, the terms rental and subscription are often used interchangeably — especially for physical products. Many businesses describe themselves as offering rentals even when their minimum rental duration is one month or longer.

In such cases, the business is essentially operating a product subscription — and we’ve covered that model separately in the Product Subscription glossary.

If, however, your goal is to understand short-term rentals, anything from a few hours up to about a month, then this section is for you. Here’s what you should consider before deciding whether to operate a short-term rental business model.

1. The product itself: durability, reuse, and storage

A short-term rental model starts with a product that can go through multiple rental cycles. The product should be durable enough to handle repeated use, simple to clean or repair, and able to maintain its value over time. You should also have a plan for what happens between rentals. Consider where products are stored when they are not in use, how they are inspected, and what your process looks like for repairs or refurbishments before the next rental.

2. The rental lifecycle: booking to reactivation

A rental involves several stages: booking, delivery or pickup, return, inspection, and reactivation. Each of these stages needs a clear process. How will customers make a booking — online or in person? How will you record which customer has which product, when it was rented, and when it is due back? How will you handle returns, product checks, and preparing items for the next rental? Defining these steps helps ensure that your operations run smoothly and that customers have a consistent experience.

3. If you have a physical store

Many retailers are now adding rentals through their physical locations. This can be a great way to test the model, but it comes with operational questions. How will you track which customer has which rental and when it should be returned? How will payments be processed and damages handled? Having a system in place to log and manage each rental transaction is critical for transparency and efficiency.

4. The value of access: what problem does renting solve?

If you are introducing rentals in a category where they are not common, start by identifying the problem you are solving for the customer. Does renting make it easier for them to try before buying? Does it save them from the cost and effort of storage or maintenance? Is your product expensive to own or needed only occasionally? Understanding the value that access provides helps shape your rental offer, your pricing, and how you communicate the benefits.

5. Location and demand

Short-term rentals often rely on local demand and convenience. Consider whether your customers are locals who need the product occasionally or visitors who need it temporarily. For example, tool or furniture rentals often target local users, while bike or equipment rentals cater to tourists. Also think about how customers typically approach your product: do they plan ahead or decide on the spot? This will influence how you manage availability and fulfillment.

6. Pricing and profitability

Short-term rental customers often compare the cost of renting with buying or borrowing. Your pricing should reflect the value you deliver, such as convenience, quality, and immediacy. Make sure you also account for your operational costs — storage, maintenance, repairs, cleaning, and logistics. A good understanding of your cost per rental cycle will help you keep your business profitable as you grow.