I raise my rates every January. I just sent out the rent increase letters at one facility. Sixty clients got a rent increase letter. The total increase n rent was $495 a month or just under $6,000 yearly profits. Key word being profits. For some of you have raised your rents in a awhile you may have even a bigger bonus.
Its easy. And there is no reason not to. Its simple. Raise your street rates once a year and raise existing tenants rents if they have been there at least a year. I just heard one owner say he has not raised his rents in 10 years. I know thats crazy but I know many of you did not raise your rents for the last couple of years and are not planning to raise them now. Shame on you.
If you have a good management program like www.Sysrasoft.com it will print you a street rates vs existing tenant rent deviation report. You are going to be surprised how much money you are loosing.
You got in this business to provide a great product and service. But you can do neither for long if you don’t raise your rates. Have your property taxes, groceries, utilities and employees wages gone up over the last couple of years. Of course they have.
And lets not increase the rents $3 and still have them be $25 below street rates. Go ahead and raise existing tenants $10 – $20 if they are that far below street rates.
The following is from my book Crush Your Competition. If you don’t have a copy now is a great time to get one. For the next 10 people who buy a copy I will send them the audio version free. Just email me at MarcGoodin@gmail.com. At some point you have to decide do you want to be like everyone else and have low rates, underpaid staff, average facility and services or higher rates and great customers who want and get that just right feeling when they are at your facility and well paid staff.
Raise Your Street Rental Rates
“You can never plan the future by the past.”
Edmund Burke 1729-1797
Unless you are the Wal Mart of self storage it almost never pays to be the lowest guy on the block, in fact it does not pay to be in the middle of the pack either. Be expensive or be free. High prices have a positive halo effect on every part of your business. And lower rates are 6 or 7 spaces down on the list of the top ten reasons your clients choose you over another. Companies with great service aren’t afraid to charge a premium for it.
That is not to say that there are not exceptions. Ten percent of the people will drive to the next town for a lower rate but ask yourself: is it your goal to capture the bottom 10% of the market or the 90% willing to pay for the value you provide. Being the price leader can actually be a marketing strategy that works. Of course you have to work hard to make sure you are the premier facility.
Often, when working with a potential client, your staff will get “stuck on price”. It is important to teach them, so they in turn teach the public, the value of your services. You have given them a head start with a cleaner, nicer, more user-friendly setting, now you need to seal the deal. Remember that it is easier and more effective to explain a higher price once than poor quality or lack of service over and over. People will remember your outstanding value and outstanding service long after the price has been paid.
Remember the last several times you were with a sales representative and they offered three price choices – Low – Medium – High? I’m willing to bet that most of the time, you often picked the medium or even the high price, especially if you perceived added quality or benefits associated with the higher price.
If you have been following these principles in order, by now potential clients should notice a difference in your business as soon as they drove in or walked through your door. Now, before they leave they should know that you are different and you offer a host of benefits not found at the typical self storage facility.
Increased rental rates provide these benefits and also allow you do give the occasional discount without impacting the bottom line.
You should have pre-determined written list of when to raise individual unit prices. Generally, every unit should have a regular price when there are less than 85% rented and a higher price when they are more than 85% rented. For example if you have 62 – 10’ x 10’ your price for 0- 53 rented maybe $109/month and 54- 65 rented could be $119. I know many owners say they will keep an eye on available units but what I have often found before they get around to raising the price is that they only have 1 or no units left. Besides making you up to an extra $2500+ in yearly profits on this one unit size, adhering to this pricing strategy encourages your renters to rent other unit sizes that you have in excess.
In some cases you may increase your rental rates prior to meeting the 85% level when you know in advance that you will sell out of a unit size quickly. One case that comes to mind may be the spring influx of college students, where all the small units rent out in a 3 week period. You actually rent more units using this method because by pointing out a larger 10’x10’ unit will only cost a few dollars more, you rent more 10’ x 10’ units leaving the smaller units for people who will only rent a smaller unit or nothing. Another unit with a seasonal increase may be the 10’ x 20’ units in November and December when the units may sell out due to winter car storage.
I have retired from my engineering practice thanks to self storage. I had a picture on the wall of a bum (an out of work contractor) on a park bench. Under the picture the saying read “I was always the low bidder”. It is true for contractors, my engineering business and for self storage you don’t want to have the lowest price. It’s a dead give away of the value of your services.
You will never win with low prices.
Here is the simple letter I send for rent increase:
Re: Rent Increase Unit # 312
We appreciate your understanding as we adjust our rates to meet the rising costs of providing top notch service. Effective for your March, 2014 payment your rent will increase $xx (plus tax) to $xxx.
At Mansfield Self Storage we will continue to work hard to keep our fees as low as possible and provide the services and value you expect.
We appreciate your business.
Mansfield Self Storage, LLC
To Your Success!
ps don’t forget to come join our new linked in group Marketing Self Storage for great ideas you can use now for more profits.