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Measure What You Manage: Using Self-Storage Software Reports to Understand Your Business

By Magen Smith Comments
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It’s often said that you should “measure what you manage” and “inspect what you expect,” but what if you’re not sure how to do that? Reviewing management-software reports can be overwhelming for self-storage operators due to the abundance of information available. With so many options, it’s difficult to know which data to seek and how to interpret it. Here’s some guidance on the process, including the information you can glean and how to apply it.

Know the Goal

The first step in reviewing management reports is to set your expectations. Evaluating information for the purpose of raising rates, checking for theft, understanding move-ins and move-outs, or determining occupancy requires unique reports and a different “lens” for looking at the numbers. Decide what you want accomplish before you dive in.

The second step is to verify the data. Reading a report with faulty figures is a waste of time at best. At worst, it’s misleading for major company decisions.

Understand Unit Rates vs. Tenant Rates

The facility unit rate (also known as the street rate) and the tenant rate (the amount paid by each individual customer) are separate numbers in most self-storage management programs. The system should allow you to set a rate for each tenant that’s different from the unit rate. For example, if the street rate on your 10-by-10 units is $100 per month, but Mrs. Jones only pays $90 per month, then the unit rate is $100 and the tenant rate is $90. The difference between the two is called a “variance.”

Operators often make two common mistakes regarding these rates:

1. Confusing the unit rate with the tenant rate. Let’s say you want to give a tenant a $5 per month discount. If you accidentally adjust the unit rate instead of the tenant rate in your software, you’ll not only eliminate the variance, you’ll change your gross potential revenue. What’s more, the next tenant to move into that unit size will pay the lower rate by default.

2. Failing to adjust all units when there’s a price change. Each unit of the same type and size should have the same price in your management software. This unit rate can change daily or hourly, but it should be consistent. If the unit rate on your 10-by-10s changed from $95 to $100, change it for all units of that size.

Understand Occupancy Rates

When unit rates are correct, your gross potential revenue and economic occupancy will also be correct. Some owners prefer to focus on unit (or physical) occupancy, but it’s more important to focus on economic occupancy. What’s the difference? The former is a measure of how many spaces are filled; the latter is a measure of money in bank.

For example, let’s say your self-storage facility has 10 units at a unit rate of $100 per month. If all 10 of them are rented at the full price, your unit and economic occupancy are both 100 percent. But what if you have four units rented at $100 per month and another four at only $50 per month? In that case, your unit occupancy is 80 percent, but your economic occupancy is only 60 percent.

  • Four units rented at $100 per month = $400
  • Four units rented at $50 = $200
  • Eight units rented = 80 percent unit occupancy
  • $600 income per month = 60 percent economic occupancy

You want to watch the gap between unit and economic occupancy. Some managers try to be slick and lower the unit rate to make economic occupancy look better. This is a mistake. Make sure unit rates are competitive. It doesn’t help to rent 10-by-10s for $100 when the rest of the market is charging $175. High tide raises all ships.

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