Setting a Strategy for Self-Storage Specials and Discounts in Today’s Inflationary Environment

There’s inflation worldwide. The cost of basic goods is increasing in the average household, which makes it more difficult to purchase anything beyond the necessities. For some consumers, self-storage may be essential; but for others, it’s more of a luxury. How can you earn business from both types of customers?

Specials and discounts are an accepted (and expected) part of our industry, whether leasing up a new project or trying to attract more business for an established facility. Sometimes it’s the only thing that separates you from competitors. Still, you need to protect your business cash flow. Let’s explore how you can use these tools effectively, so they boost rather than detract for your success.

The Various Types

You may be wondering why I’ve used both terms: specials and discounts. Aren’t they the same thing? There’s actually a difference.

A special is awarded upon move-in. It’s a one-time application that saves the customer money for a limited time. It can be offered in person, online or over the phone. Common examples include first month free, half off two months or $1 for the first month. These offers allow the customer to rent at a lower price initially, which is beneficial to those who may be in the middle of an expensive move, spending money on lots of things at once.

A discount is applied to the self-storage customer’s rate every month unless renegotiated. Examples of this are 10% off the monthly rent, $50 per month for any unit size or type, or “price-lock guarantee.” Many operators also offer concessions for military, teachers, charitable organizations, first responders or other groups. These are important for new customers who are more sensitive to their monthly payment vs. the initial move-in cost.

What to Offer

Any decisions regarding which specials or discounts to use, how to market them, and how long to extend them are up to you as the self-storage operator. Any offer can be adjusted at any time, especially if you aren’t achieving the desired results. Whatever you choose to give your customers, there are many factors to consider. The goal is to create a win-win situation for you both. First, ask yourself:

These two pieces of information will help you create a concessions program that fits your needs as well as those of your tenants. For example, if you just opened your facility and lease-up is a top priority, but low upfront cost is important to your prospects, a $1 move-in can be effective. If yours is an established facility with high vacancy in climate-controlled units, but your customers are price-sensitive, you might offer 20% off on this type.

Sometimes, it makes sense to leave the choice up to the customer, as it allows them to decide what fits them best. All options can be designed to support your facility’s goals.  For example, if you have a lot of empty 10-by-10s and 5-by-10s, offer a half month free on a 10-by-10 or a $1 move-in on the 5-by-10. This allows the customer to choose between a larger or smaller space based on their personal budget.

How long your customer intends to rent their unit should also be considered. For example, if you’re dealing with a college student who only plans to store their items for summer, don’t offer three months at half price. Instead, try an easy move-in solution such as $25 off a minimum three-month rental.

Let’s look at it another way. Say you’re renting a unit that costs $100 per month and you have a customer who plans to rent for six months. If you offer them one month free, that’s a total loss of $100, regardless of how long they stay. If you offer them a 10% discount for the duration of the rental, the loss is only $60—unless the customer decides to rent for longer, in which case, the loss increases each month.

Occupancy is another key element. Your self-storage unit vacancy will fluctuate over time, as will your use of concessions. Lower occupancy generally leads to more specials or discounts to fill space. As occupancy increases, however, any offer should decrease or be more specific to the unit sizes and types you’re attempting to rent. Any unit sizes with fewer than three available should never be rented at a lower rate.

In the end, it boils down to balance. It’s OK to give concessions when necessary, even if it temporarily lowers net operating income; however, no special or discount you provide should have a long-lasting negative impact. If an offer fails to increase the volume of rentals, customer length of stay or overall revenue, it isn’t serving the business and should be discontinued.

Spreading the Word

Marketing your specials and discounts can drive interest in your self-storage business. Showcasing this information online is extremely important, but don’t stop there. Rental inquiries come through the facility website as well as phone and drive-by traffic. Your offers should be apparent in all these places. They shouldn’t be a secret!

Specials and discounts can be a healthy part of your self-storage revenue plan. Carefully pick ones that suit the needs of your business and customers. The right ones will increase rentals, income and facility value.

Cassie Dodgen is president of operations for Pinnacle Storage Managers, the third-party management division of Pinnacle Storage Properties. Her 10 years of industry experience includes acquisitions, development, operations, multi-store leadership and maintaining excellent company culture. Her career has included manning a single site to running several multi-million-dollar businesses. For more information, email [email protected].