A tiered pricing approach is becoming more popular in the self-storage industry. Have you considered all the powerful reasons why your operation should adopt it? Value pricing not only fuels facility growth and increases revenue, it’s a way to counter competitor pricing and change the psychology of the online rental process.
How It Works
With the tiered pricing method, also known as “good, better, best” pricing, an online self-storage renter sees a range of pricing options for similar units. The rates go up as the unit becomes more desirable. For example, a typical 5-by-5 might be listed at $25 and displayed as the “good” option. The “better” choice is the same size but closer to the elevator, making it easier to access. That one might be $35 per month. The “best” option, which is near the elevator and a security camera, is listed at $42. The buyer has the option to pay more for the features he finds most valuable.
One way to optimize this process for renters is to present these options in a 3D map that shows each size and location, with units displayed in different colors based on their tier. Users should be able to rent directly from the map and filter units by value-add features. The prices are dynamic and can easily be adjusted based on facility demand. Descriptions can also be added to each unit type to provide more details.
By offering tiered pricing, not only will your self-storage facility capture online prospects who are interested in renting with you, you’ll be able to satisfy the needs of a diverse customer base. Those renters who are price-sensitive will opt for the “good” option. Those who want a more upscale choice and are willing to pay more for desirable unit qualities, such as location and climate control, will choose “best.”
This approach also eliminates the need for one-off discounts and special offers. Anyone who wishes to pay less can clearly do so. If inventory is limited at whatever tier a customer desires, then he’ll feel more urgency to complete the transaction.
Value pricing also allows you to better compete in your market. If competitors haven’t adopted this approach, their online rental tool will only display one price for each unit size, regardless of its features and benefits, and they’ll be at a disadvantage.
Finally, tiered pricing makes it easier and faster for prospects to make a self-storage rental decision. When you give them clear, well-defined options, there’s less need for them to compare multiple facilities. They won’t waste time trying to figure out how your 5-by-5 compares to others. Once they see and know what they want, the decision becomes simple.
Not convinced? Imagine this: You’re driving to work and decide you’d like to pick up some coffee. There are two shops on the way, not far from each other, and they both serve essentially the same stuff. One clearly advertises the option to add vanilla syrup for 50 cents more or to upgrade to a latte for just a dollar. The competition offers different flavors and styles, too, but doesn’t make its options clear. You don’t have time to figure it all out while sitting at the drive-through window. Having faster, simpler choices makes it easy to pick one store over the other.
The Renter Mindset
The most unrecognized and misunderstood benefit of tiered pricing is how it positively impacts the self-storage customer mindset. Showing the buyer that he can have the best of all choices for just a small increase in spending, plus the very clear advantages of doing so, encourages him to go for the top level.
Think about the last time you booked a hotel. If you have the option to upgrade from a room facing the parking lot to one with an ocean view for just a few more dollars, you’re probably going to grab it! When you take a flight, paying premium will get you a better seat. In golf, it’ll get you a better tee time. By labeling your self-storage units good, better or best, you can leverage the same psychology. It gives the renter a sense of empowerment and increases his purchasing confidence.
Tiered value pricing has already been adopted by several industries and will continue to be implemented as more people move toward a digital buying experience. Using it as part of your self-storage operation can help you attract more customers, boost your revenue and set you apart from competitors. It also makes your online renters feel more confident, and make quicker buying decisions.
Kodi Churchill is the marketing manager for The Storage Group Inc., a digital marketing firm that provides website development, search engine optimization, pay-per-click advertising, reputation management, software development and more. She’s responsible for the planning, development and execution of all content, email and inbound marketing. She also manages social media creation, company site updates and marketing software. For more information, call 407.392.2328.