Once you have the answers to these questions, you can start to develop a sales presentation and marketing plan around this information. Check the rates of your competitors on a regular basis and be proactive. It’s better to lead your market then play catch-up.
Now that you know what’s happening in your market, you can begin to adjust your strategy to most effectively manage revenue. The most common way to begin is to execute rent increases on current tenants. The most dangerous statement operators can make in regard to revenue management is, “I'm 100 percent occupied, and I don’t want to raise rates.”
First, you don’t get a Super Bowl ring for being 100 percent occupied. There's no award, and it hampers your facility’s revenue potential. I would rather be 95 percent occupied while simultaneously raising my standard rates and performing rent increases on my current customers. Second, if you’re 100 percent occupied, you’re turning away potential customers on a regular basis. Finally, the return on your marketing campaigns will be weaker than it should be.
The largest self-storage companies in America raise rates on current customers on a regular basis and so should you. Two of the most common approaches are:
- Increase of up to 7 percent and as often as every nine months
- Increase of up to 6 percent, once at the initial six months and then again every 12 months
Most self-storage software programs include revenue-management functions that will handle these increases for you automatically. Don't raise rates individually. Let the computer do it automatically, and then handle customers on an individual basis.
If you look hard enough, you can find a reason to hold off on rent increases for all your customers. One tenant lost his job, one lost a home, the other is on a fixed income, etc. Don't have this mental conversation. Raising rates is imperative for the success and viability of your business. Also, consider raising rates on current customers when you implement a site improvement such as security enhancements, or in the height of summer and winter. No one wants to waste a Saturday afternoon in 90-plus degree heat, moving out of a 10-by-20, over a $5 increase.
In addition to raising rates on current customers, consider using different pricing strategies to adjust rates on new ones. All units are not created equal. Yes, they were built with the same materials, but location and amenities can make a difference. For example, let’s say someone wants to rent a 10-by-20 on the second floor, and there are two units available. One is right next to the elevator and another is in the back hallway. Is the unit next to the elevator more valuable to your customer? You bet.