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Propane Tank

Making Self-Storage Add-On Profit From Propane Sales

If you’re looking to diversify the services you offer at your self-storage facility, consider propane sales. Here’s some first-hand insight from a facility manager who can vouch that it’s a revenue generator.

When most people hear the word “propane,” they either think of Hank Hill from the early 2000s TV show “King of the Hill” or their own dad wielding a burger-flipper next to a grill. However, there are many uses for propane gas. From heating homes to fueling trucks to harvesting crops, propane is a popular commodity.

As a self-storage manager with experience offering propane as an add-on profit center, I can tell you it’s a revenue generator. If you’re looking for a way to diversify your offerings, consider it. Following is some insight to selling the product including offering types, pricing and other logistics.

Offering Types

There are two ways to sell propane at a self-storage facility. The first is to install a large tank—1,000 gallons or more—on the property and become a cylinder-refilling station. From my own experience, this has been quite popular and profitable. I managed a facility for two years where we refilled tanks of all sizes. The gross revenue increased each year and accounted for a large portion of the facility’s non-rental income.

The most important thing to remember when installing a tank on a commercial property is you must adhere to regulations from the National Fire Protection Agency and your state. There are strict guidelines to follow.

The other way to offer propane is to set up a cylinder exchange on your property. This tends to be more popular in suburban and urban areas since it doesn’t require a lot of space. Some propane companies have their own tank-exchange programs. The drawback is you can only exchange the grill-tank size (20 pounds).

In general, refilling stations work well for facilities in more rural or residential areas that have the room. Tank-exchange programs are a valuable add-on at smaller facilities in suburban or urban areas.

Suppliers

Once you’ve decided which method of selling propane is best for your facility, then you need to choose a supplier. For the cylinder-exchange program, the best company could be the one that offers the best commission on sales. For onsite refilling, you want a supplier that’s highly reputable and guarantees quick, consistent delivery.

At my facility, there were times in the middle of winter when I ran out of propane and had to schedule an immediate refill of the large tank. For this type of situation, a nationally known company may be better than a local or regional one as it’ll have a bigger supply of gas.

Prices

You’ll also need to determine the cost of goods. On tank-exchange programs, the price for an exchange or new tank is generally determined by the supplier. The storage facility receives a commission on those sales.

If you choose to refill on site, there are two methods of setting price. Some stations have a set price per cylinder size, regardless of how much is left in the tank. The method I used was establishing a set price per gallon. Other important considerations include the time of the year and what other resellers in the area are charging.

With propane services, the profit can be limitless. However, as with any new offering, it’ll be slow-going for the first few months. My propane sales had a sluggish start, earning $8,700 gross revenue in the first year. Then it exploded in the second year, bringing in $17,000.

To generate even more revenue, you may want to sell accessories with the propane. For example, if you have a refilling station, you could sell empty tanks, extra hoses, knobs and adaptors. In the spring and summer, sell grilling supplies such as tongs, spatulas and grill covers. During the fall and winter, consider adding portable heaters, turkey fryers and other heating supplies to your product mix. Get creative!

Marketing

Like any add-on profit center, propane services should help a self-storage facility stand out among the rest. I suggest marketing them alongside the other amenities you offer. When creating a plan, consider your location. The facility I managed was between residential and rural areas and near a lake, which gave me numerous avenues to advertise.

The supplier I used provided us with large signs to display roadside. A few other ways to get the word out include e-mailing current tenants, meeting people at nearby RV parks and campgrounds, and partnering with local homeowners’ associations.

When looking for creative ways to generate extra revenue, take a serious look into propane sales. The future for propane as a major fuel source is bright, and self-storage operators can capitalize on this by selling the gas and related accessories.

Author’s note: To learn more about propane, contact a local supplier, the National Fire Protection Agency, National Propane Gas Association or your state’s propane regulation board.

Steven Jeffers, manager of Monster Self Storage in Seneca, S.C., has five years of industry experience. He’s married with two teenage stepsons, and he loves to play disc golf and volunteer at his church. Monster operates nine locations: one in Georgia, two in North Carolina and six in South Carolina. For more information, call 843.510.2096; visit www.monsterselfstorage.com.

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