Charging for Value-Added Services
Boat and RV owners demand security to protect their toys when they’re stored but also look for convenience when returning from a long trip. Luxury and convenience may be coveted, but they do not have to be free. Many facilities strike a balance between free or value-added services and additional pay-to-play privileges.
Customers who choose to rent uncovered spaces, for example, generally don’t have the same access and conveniences as tenants who opt for covered or enclosed spots. “They are completely different customers, and you have to keep exclusivity with your covered and enclosed [renters],” Woudenberg says. “We are just starting an uncovered phase, and those tenants will not have 24-hour access to the services that our covered and enclosed customers have.”
Thus, all customers may have use of the wash bays, waste dump and power, but access comes with a price. “All of our customers in covered and enclosed enjoy complimentary use of wash, dump and power,” Woudenberg explains. “Our uncovered customers will have access only when the office is open, and they will pay for the use of these services.” Similarly, enclosed and covered tenants at RV SuperStorage also enjoy 24-hour access to the facility through computerized gates.
Pay-for-use services and higher rents for added privileges and security can enhance profit, but they also come with internal costs. Covered and enclosed spaces, for example, may command higher rents, but have higher building and maintenance costs, explains Lois Nielsen, marketing and site manager for Empire Boat & RV Storage, a $7 million covered-storage facility that opened three years ago in Healdsburg, Calif.
Determining paid services vs. complimentary may simply come down to internal costs. “This depends mostly on the cost of maintenance for these services. We charge for almost all services, excluding the dump station (free to all tenants), potable water and the air compressor,” Nielsen says. “The other services are too expensive to maintain if we don’t charge the tenants.”
In general, Nielsen says the facility’s best margins come from maintaining high occupancy. “The storage rent itself provides the best profit margin,” she notes. “It does not cost the site anything to add an extra tenant to the facility. We have mostly fixed costs at the facility (employee salaries, utilities, inventory, advertising, etc.), but these don’t necessarily increase if we can simply add more tenants.”