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Raising street rates and what to do when you need to drop prices back down again

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  • Raising street rates and what to do when you need to drop prices back down again

    I have steadily increased our rates a few times for various units over the past year to bring them closer to the general street rates. We've caught up for the most part, though rates in general keep going up. I want to raise our rates for 2 sizes again, because I know I can rent them at those prices now and the foreseeable future. My question is what to do with tenants if (more likely when) I need to lower the rates in the future and they would be paying the higher rate. We don't hide our prices and they are available online for anyone to see. We also get enough friends, family, neighbors etc. that I know people compare their rates based on comments I've had. And before anyone mentions it, yes I am doing rent raises as fast I can. I just know there would be some people who complain and I'd like a plan in place before we have to use it.

  • #2
    Generally don't raise the rates on current tenants over street rate. Raise street rate and then raise tenants, keeping them below so you can state-You're paying less that Joe blow coming in today/
    "The comeback is always stronger than the setback."
    Mom, Navy Vet, genealogist and voracious reader
    WA state

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    • #3
      Originally posted by KrisinWA View Post
      Generally don't raise the rates on current tenants over street rate. Raise street rate and then raise tenants, keeping them below so you can state-You're paying less that Joe blow coming in today/
      We are keeping everyone we raise below street rate (minimum $10), though most haven't had a rent raise in so long its usually more than that. I'm worried when street rates drop again because I don't see this moving frenzy lasting forever. A new facility is about to open way down the street and our closest competitor is adding 100 new units.

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      • #4
        I'd deal with it on a case by case basis if it happens. You might be borrowing trouble, as my pop used to say.
        "The comeback is always stronger than the setback."
        Mom, Navy Vet, genealogist and voracious reader
        WA state

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        • #5
          When we first opened this location we rented the 10x20's at $172 then when we were trying to fill up, (this was 3 years ago) I ran a special of $130 and a lot of them, my regular customers saw that. but I told them what I was doing, the $130 rate was raised in $10 increments over the next year. It is your business, make the money now, my 10x20's are now $195 and I am 100% full with 35 people on a wait list. If someone really threw a fit, I would probably give a little discount, but I think you should make that extra money now, while the need is there! And I don't raise the current customers that came in at a lower rate too big of increases. Dollar or Public storage raise their customers OVER the standard rate, and they raise the rates and lower them constantly. Just my opinion on it, I think you should get more money now, maybe you wont have to lower the rates!

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          • #6
            How many tenants do you really think even keep up to date on your current prices. My guess is not many. If street rates drop below and someone does ask, just tell them its a temporary sale price and they will be raised back up in a couple months.

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            • #7
              I have many customers over street rate, and they still get regular increases. I have never had one ask about a lower rate online. Generally, once they are in they don't look anymore. If someone did complain, I'd give them 2 options: 1) split the difference on the increase with them, or 2) they can physically move everything to another same-size unit for a new rental and they can have the lower rate. But again, I've been doing increases like this since 2008, and I've never had anyone compare their rate to what the new customers were paying now!

              Just do it!
              MamaDuke

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              • #8
                Thanks everyone! I'll give it a go!

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                • #9
                  Here's the plan:

                  Tenant calls: "I was looking to get a second smaller unit on your website and noticed the rate for your 10x15s is $95.00 but I'm paying $125.00. Is there any way I can get that rate since I've been with you guys for 5 years and have never been late?"

                  Me: "Our listed rates will vary based on supply and demand. That $95.00 rate you see now may be $130.00 three months from now. And tenants who rent at $95.00 today will not remain at $95.00 - their rent will eventually go up."

                  You can then remind them of some ways they can save money, if you offer any. For example, discounts for paying multiple months up front, autopay discounts, referral discounts, etc. But I would never let them sway you into lowering their rate based on the current list rates. That's a slippery slope. And I'm guessing they wouldn't want you to raise their rent once the list rate goes up, LOL! I also would never let them play any silly games such as "Could I move out of my current unit and then re-rent it at the lower rate?" I suppose if they're really sneaky they could rent a second unit, then "consolidate" into that unit and cancel the original one in order to get a lower rate. But if they let me know that's what they're intending to do, I would refuse to rent them the additional unit. I don't want tenants here like that.

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                  • #10
                    Originally posted by RMRSS View Post
                    I suppose if they're really sneaky they could rent a second unit, then "consolidate" into that unit and cancel the original one in order to get a lower rate. But if they let me know that's what they're intending to do, I would refuse to rent them the additional unit. I don't want tenants here like that.
                    I used to have a father/son that would take turns renting 10x20's and actually moving everything from unit to unit (10x20?!?!?!?) every month or 2 for the discount. It took me a while to catch on because they would move things after office hours. But once I finally saw them together moving things from one to another, I put a stop to it. They moved on and I rented to more stable tenants!
                    MamaDuke

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                    • #11
                      It is simply supply and demand.
                      There are times when an existing tenant does see their size on our website and heaven forbid it is listed at a lower rate.
                      I explain why there is a difference and they tend to understand.

                      I have tenants that THINK they have the problem solved, even when they wish to transfer to avoid an increase, they suddenly find out that there is a $10. transfer fee that can not and will not be voided.
                      LOL
                      Don't put off until tomorrow, what you can do today.

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                      • #12
                        We don't generally raise our good long time tenants above street rates so we don't run into that issue much, but when we get busy we are really aggressive with our push rates rather than raising our street rates. If someone rented in the summer and saw our winter prices were lower and complained, we will always point out that we don't raise their rents higher every time our rates go higher either. They signed a contract at a certain price that they were ok paying at that time.

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                        • #13
                          I don't advertise any rates online.

                          I don't want customers that are only shopping rates, they can go to the orange doors down the street and have their stuff stolen if they want to shop rates (and even then, I'm lower than they are). I don't want undesirables seeing my rates online and showing up to rent that unit. Call me, talk to me, and we'll determine together if this facility is a good fit for you. Just like airplanes, hotel rooms and rental cars, nobody needs to know what the other guy paid for that same seat, room or that same car.

                          35 yrs. and I've never once lowered rates.
                          In no way affiliated with Storman software.

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                          • #14
                            Originally posted by Storman View Post
                            I don't advertise any rates online.

                            I don't want customers that are only shopping rates, they can go to the orange doors down the street and have their stuff stolen if they want to shop rates (and even then, I'm lower than they are). I don't want undesirables seeing my rates online and showing up to rent that unit. Call me, talk to me, and we'll determine together if this facility is a good fit for you. Just like airplanes, hotel rooms and rental cars, nobody needs to know what the other guy paid for that same seat, room or that same car.

                            35 yrs. and I've never once lowered rates.
                            Hmm. Well, obviously if this is working for you, then by all means don't change anything. But personally, as a consumer, a website that says "call for pricing" is a big turnoff for me and I'll move on to a site that gives me all the info up front. And people shop rates by calling too. We don't do online rentals (reservations only), so we still talk to everyone before they rent. Most of my trouble tenants that I refuse to rent to have been walk-ins anyway, not online reservations. As for lowering rates, if we have 15 10x10s open at $100 month and all our competitors are charging $75, we're going to have a hard time filling those up without coming down on that street rate. Of course, if your occupancy stays high, then that's different. The reality is, some people simply don't CARE about how great your facility is - they are simply concerned about price and location. But that doesn't mean they will be bad tenants. We have plenty of great tenants here that only rented here because we were the closest to them.

                            At least, that's true of where we are. Your demographics may be different.

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                            • #15
                              Originally posted by RMRSS View Post

                              Hmm. Well, obviously if this is working for you, then by all means don't change anything. But personally, as a consumer, a website that says "call for pricing" is a big turnoff for me and I'll move on to a site that gives me all the info up front. And people shop rates by calling too. We don't do online rentals (reservations only), so we still talk to everyone before they rent. Most of my trouble tenants that I refuse to rent to have been walk-ins anyway, not online reservations. As for lowering rates, if we have 15 10x10s open at $100 month and all our competitors are charging $75, we're going to have a hard time filling those up without coming down on that street rate. Of course, if your occupancy stays high, then that's different. The reality is, some people simply don't CARE about how great your facility is - they are simply concerned about price and location. But that doesn't mean they will be bad tenants. We have plenty of great tenants here that only rented here because we were the closest to them.

                              At least, that's true of where we are. Your demographics may be different.
                              All good points.

                              People do shop rates by calling, but the point is they called. I can sell them over the phone. My closure rate on phone calls, if I have the unit they need, is probably 80%. The vast majority of my tenants will email for rates, mostly through pushing a contact button on Yelp. 70+ 5 star reviews is what gets people to initiate contact. I don't pay a penny for Yelp. I know Yelp does not work in many markets, I'm very happy it works in mine. If they email me, my closure rate is probably 90%. ESPECIALLY if they email me at 11pm and I return their email in minutes with a personalized greeting so they know I'm not a bot. I've sealed a rental on a number of units after midnight using email.

                              I have 400 units, and have been very blessed to have gotten occupancy to 90%+ in the first 3 years of business and haven't been below that since. As a whole, my market has had steady increase in rates year over year since I've been in business (1987). I know there have been large corporate stores that used dynamic pricing and their rates are all over the map, I've heard the complaints by their managers.

                              Demographics and markets are the key here, I'm fully aware that my experience isn't like most other markets.

                              Our motto is "the best value in storage". People need to understand that value isn't price.
                              In no way affiliated with Storman software.

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