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June 15, 2021
In self storage, setting discounts to attract new tenants is a common practice. However, discounts can quickly eat into profit margins or attract the wrong kind of customer if not implemented purposefully. The psychology of self storage rental rates reveals that discounts are best used strategically and sparingly to accomplish specific goals. By pursuing a wiser way to offer self storage discounts, you’ll be able to protect your profit while increasing revenue and occupancy.
In this article, we’ll look at common self storage discounts, explore the pros and cons of offering discounts, and present some best practices for offering discounts at self storage facilities.
Self storage facilities offer a variety of discounts to attract new tenants. Some of the most common discounts offered are:
There are many variations on these discounts—from the percentage amount to the number of months that need to be rented to receive the discount. The specific type of discount offered by each facility should be based on where they are in the facility life cycle (e.g., facilities in lease-up mode may offer more discounts than established facilities) and the current local market.
In addition to these commonly used discount strategies, consider offering some of these unique discount ideas.
There are advantages and disadvantages associated with providing discounts to your self storage customers. Below are the pros and cons to consider.
Pros of Offering Self Storage Discounts
Cons of Offering Self Storage Discounts
The key to success when offering discounts for self storage facilities is to coordinate the objectives of the entire facility (e.g., operations, marketing, revenue management).
In other words, it is important to first determine when, how, and why you’re offering a particular discount so that each discount supports a specific marketing objective or need at your facility.
For example, a brand-new storage facility in lease-up mode may find it beneficial to offer discounts to create buzz and attract tenants to the facility. However, once the facility reaches a certain occupancy level, these discounts should be discontinued.
Once a facility has reached a comfortable occupancy rate, discounts can help fill hard-to-rent units or units for which there is a large surplus.
By offering discounts on less desirable units, storage facilities can increase their occupancy without hurting their profit margin. These types of targeted discounts are designed to boost occupancy in units with less than 80% occupancy while still allowing more desirable units to be rented at higher rates.
Timing is an important consideration when deciding on which discounts to offer. If it is a “hot” time of year for a particular type of unit (e.g., small units used by college students for summer storage), any existing discounts should be lifted on these types of units to capitalize on the increased demand.
It is also a best practice to have an expiration date associated with every discount, usually after the first month. However, it is also important to be up-front and clear about the terms and restrictions associated with a discount so that customers don’t feel they were involved in a “bait and switch.”
Another best practice is to scale back discounts whenever possible. Consider offering a 20% discount during the first month rather than 50% or offer a discounted rate for the first three months rather than the first six months. By experimenting with lower and shorter discounts, self storage operators may discover that they can reap the benefits of offering discounts but without giving so much away.
In this article, we looked at some common self storage discounts—including lifestyle, referral, promotional, and amenities discounts—as well as some more unique discounts that offer opportunities to reward long-term tenants and promotional materials for social media.
We also looked at the pros and cons of offering self storage discounts. Finally, we look at best practices for offering discounts. The bottom line is that offering self storage discounts has a place and time, but the key is to use them strategically and sparingly while also coordinating the discounts with the broader marketing and revenue management objectives of a facility.
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