Profitability is a constant pursuit in self-storage, which makes the implementation of a well-designed revenue-management plan a linchpin to success. Central to these efforts is your unit pricing. If your rates are too high, you can end up with excessive vacancies as potential customers seek more affordable alternatives, not to mention a business reputation as being too expensive. If they’re too low, you’ll fill units, but often at lost profit, which undermines the long-term sustainability of the business.
Fortunately, technology can help in your quest to optimize income. By leveraging tools and indispensable data, including insight to competitors’ rates, you can easily stay synchronized with market trends. When appropriately integrated with your facility-management software, revenue-management tools can automate street-rate adjustments for new tenants and seamlessly fine-tune pricing for existing ones. Let’s dig into how you might benefit from technological assistance in the area of process and some steps for effective implementation.
A Technological Approach
In today’s rapidly evolving business environment, technology can help self-storage operators streamline their facility processes and leverage data-driven insights. In regard to revenue management, its key advantage is the ability to keep you attuned to market dynamics. For example, making informed rate decisions based on real-time pricing helps you stay competitive and allows you to adapt to the market without the need for extensive manual research.
Integrating technology with your self-storage management software amplifies the benefits, as your program can make sense of occupancy, customer behavior and demand patterns, then adjust unit prices for new and existing tenants accordingly.
Adjusting your self-storage rental rates manually might seem more cost-effective initially and allow you to avoid the complexities of dealing with technology; however, it takes more time and effort. You have to gather and compile data, and analyze market trends. The process can be labor-intensive, slow and prone to human error. As a result, you can miss out on revenue opportunities.
A technology-assisted approach, on the other hand, streamlines your pricing updates, making them quicker and more consistent. There are some vendor fees, and it takes time to set up and learn your chosen service or platform, but it’ll free up time that can be focused on other revenue-generating activities. The potential to increase income and improve operational efficiency makes it a compelling choice for self-storage operators looking to optimize their pricing strategies.
If you decide to go the technology-assisted route with your self-storage revenue management, here’s how to get the most out of the implementation:
- Standardize your unit setup in your facility-management software. This ensures smooth data sync and pricing adjustments without complications from inconsistent configurations.
- Grant your revenue-management vendor access to your management software so they can integrate pricing algorithms and data collection with facility data as well as ensure secure connections for data protection.
- Your vendor may ask for historical data, including occupancy rates, unit pricing, customer demographics and (sometimes) competitor rates. This is vital to creating accurate pricing models that match your facility’s unique dynamics.
- Your vendor will likely want to set up automatic payments. This ensures continuous service functionality and consistent monthly revenue optimization.
- Initiating a third-party tech service may entail additional steps, such as online-form completion or signing agreements. Specific requirements for setup will vary by provider.
- The final step is to configure your new revenue-management tool to align with your facility’s pricing strategy. Work with your vendor to define pricing rules, thresholds and algorithms tailored to the site’s characteristics and goals.
If you’re intrigued by the benefits of a technology-driven, revenue-management solution for your self-storage operation, it’s crucial to embark on the journey with a spirit of curiosity and due diligence. Initiating conversations with potential vendor partners and thoroughly evaluating their offerings is paramount. Here are some key considerations:
- Technology knowledge. Understand how the tool works, from data collection to pricing algorithms. Clarity here aids informed decisions and will maximize potential.
- Vendor reputation. Research each company’s track record. Reach out to their clients for feedback. A reputable provider with a successful history adds value.
- Cost-benefit check. Weigh the implementation costs against potential benefits. Account for third-party vendor fees and how they stack up against the potential for increased revenue and efficiency.
- Customization. Assess whether the technology can be tailored to fit your self-storage facility’s unique needs and pricing strategy. There’s no one-size-fits-all approach.
- Training and support. Ask whether the vendor supplies this. A smooth transition will require proper education and ongoing help.
- Secure customer data. Due to the sensitive nature of this information, ensure your vendor and their technology prioritize data security and comply with regulations.
A well-crafted revenue-management plan that emphasizes strategic pricing is the cornerstone of profitability for self-storage operations. Today, harnessing innovative solutions is key to optimizing rental rates and increasing overall income. When executed thoughtfully with a valued vendor partner, a technology-driven solution can propel your business toward sustained profitability and long-term success.
Jed Isom is a data scientist and founder of Price Monster, which offers a subscription-based, dynamic-pricing solution. Designed for self-storage operators, it integrates with existing facility-management software to automatically update unit pricing to keep up with market changes. To reach him, call 480.739.2281; email [email protected].