If you aren’t actively managing your facility’s revenue, you’re leaving money on the table. But you don’t want to leave money on the table, do you? We highly doubt it.
To make sure you’re holding onto that money, you should put a revenue management system in place.
Mara Rodriguez, pricing analyst at self-storage operator The William Warren Group, said: “Revenue management is one thing that can make a huge difference in profitability. When we take over properties that don’t have a revenue management strategy in place, we can typically increase their revenue growth beyond industry standards.”
If you can afford it, Rodriguez recommends investing in revenue management software designed for self-storage operators. But if you just can’t bear the thought of plunking down money for this software, you still can rev up your facility’s revenue. Here’s how.
1. Look at rates for current tenants.
Deliver a small rate increase on each customer’s anniversary date, or at regular intervals such as every nine months. This might create some churn, but that’s a good thing, according to Rodriguez. The average rate increase for existing contracts should be 6 percent to 12 percent.
Be sure rate increases are based on move-in dates, and be sure to give plenty of advance notice to tenants.
2. Do your homework.
Research your competitors and determine the best market rate for new tenants. If rate-sensitive tenants move out, replace them with new tenants at appropriate market rates.
3. Assess occupancy rates.
Anne Ballard, president of marketing, training and developmental services for self-storage operator Universal Storage Group, recommends evaluating occupancy rates in the middle of each month. If a certain type of unit, such as 10x10s, has an occupancy rate of at least 90 percent, it’s time to raise the street rate—your advertised rate for new tenants.
“A lot of operators don’t understand that having high occupancy levels actually hurts your revenue growth. If you have no one moving in and out, your revenue is stagnant,” Rodriguez said. “Rate increases generate some churn and allow you to replace old customers with new customers at higher rates.”
4. Track revenue growth.
Rodriguez recommends monitoring revenue growth month-over-month. In addition, you should pay attention to move-in and move-out activity before and after rate increases.
To learn five simple ways to boost the results at your self-storage facility, download this free white paper: marketing.sparefoot.com/whitepapers/5-simple-scrappy-ways-to-amp-self-storage-results.