It is essential to have multiple strategies in place for the appropriate time to begin increasing your rates to maximize success in the self storage industry.
1. Know Your Local Surroundings
To begin, you must focus on street rates, or the basic monthly rental rates that your managers will quote to any potential new customers.
Self storage is a numbers game of sorts for potential customers.
They will visit on average 3 to 5 self storage websites to find the best value. Some of the time they will settle on the lowest rate they see, but more typically the potential tenants are looking for a place with an excellent reputation that they feel safe storing their belongings.
Now, we do not suggest lowering your standards and racing to the bottom to be the cheapest option. You do not want to have the best features in town but have the lowest rates.
At that point you are hurting your bottom line by not increasing your rates. Try to determine what sets your self storage facility apart from the competitors and make an educated adjustment to your pricing strategy.
If you are starting out in this business, it is good to know that it is common to have discounted rates since you are trying to attract new customers, but once your more popular units are getting rented, then that would be a perfect time to increase the street rates.
2. Internet-Only Specials
Offer online exclusive specials or web rate deals that can only be purchased online to attract new customers.
By combining website specials with online rentals, you create a strong incentive for a potential tenant doing online research to go ahead and store with you.
It is a great way to get them off the market and pick you over competitors. Create some graphics and post them on your social media pages or spend some money on ads to help build awareness of your specials.
The fun thing about self storage is that you can be as creative as you want when you market and advertise. Be sure to monitor your competitors online-only sales as well because you do not want to be unaware of their practices.
3. When Unit Occupancy Gets High
Pricing your street rates is not a one time only event, it could be a weekly analysis that you should monitor.
For our clients, we set automatic push rates based on unit occupancy.
It merely means that when you only have x amount of a particular unit type left, you raise the rate automatically to get the most ROI possible while getting that unit occupancy to 100%.
Once you get to 100%, you should be increasing the overall rate anyways.
4. The Next Step
Once you get the hang of setting street and push rates, you need to understand how to increase the prices of your existing customers.
There are many different routes that you can take when trying to figure out how and when to raise the rates for your current tenants. This Inside Self Storage article offers three different options for conservatively raising existing customers rates.
When you are ready to break the news to your customers, either send them a letter or create a templated email. A great time to decide on when to send a rental increase is 30 days before a busy month.
By waiting 30 days, you can try for a higher rate the following month due to your street rate being likely higher than what the previous renter was paying. Give your tenants the rate increase value in dollars and not in percentages.
For example, “Dear Mrs. Doolittle, as of September 1, 2018, your new monthly rate will be increased by $XX. We truly appreciate your business.”
According to Inside Self Storage, only 1% of tenants will follow through with moving out due to a rate increase.
Let the tenants know the rate increases are part of the business, and anywhere they may take their business to will have fees too.
Each self storage owner needs to find their precise method of street rate pricing, but if you have a higher occupancy rate and haven’t increased your rates, it may be time to follow this guide.
Do not be afraid to change your rates, do your research and plan out a competitive strategy that will make you the self storage leader of your area.
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