Announcement

Collapse
No announcement yet.

Raising Rates - Inflation

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Raising Rates - Inflation

    How has the excessive inflation influenced rate increases?

    We usually raise rates every couple years, but are thinking of raising sooner due to inflation... although I have read that is a poor reason/response to customers.


  • #2
    I'm thinking of doing the same, I raised our street rates a couple of months ago and have not seen a decrease in vacant units renting. When I do raise rates on existing customers, it's only after the increased street rates have been in effect for awhile and I don't increase current customers to the new street rates. I keep them just below the new rates as a thank you for their loyalty.

    I have never tied an increase in rate to anything in particular, I don't feel the need to justify to my customers why I'm increasing rates. I merely say that as the cost of doing business increases over time there is a need to adjust rates accordingly. In this current economic climate I don't know how anybody could not understand that. If they call and would like to talk to me about their rate increase, I'm happy to do so, and point out that I have been renting units of their size for much more money for many months. But, in appreciation for their business, I will always keep their rate below a new customer rate.

    Our company policy is to not raise rates on any customer for at least 12 months. The resonates with the people that call me VERY angry that they've had their 4th increase in one year at the big corporate stores. I get them in here, they see how much better I will treat them and how much better the storage experience is and I've never had a problem with anybody being upset about a rate increase.

    Good luck, it's fun to push a button and see the monthly income jump up!


    In no way affiliated with Storman software.

    Comment


    • #3
      I don't think you tie your rate to inflation, but to market rates. We have seen substantial market rate increases in the last year or two. For example, 10x20 units were $79/month in early 2021. They are now $99. From May to August last year, we were able to get $119/month!
      Most of this was driven by limited supply and by new competition in the market charging higher rates to cover construction costs.
      I would really recommend checking all of your competitors websites at least monthly to see what they are charging.
      We made the decision last year to bring all of our existing tenants to market rate. This was a small increase to some, not so small to others. We definitely lost a few customers as a result, got rid of a few customers we didn't want, but we also got a few thank you comments for motivating them to get rid of their junk.
      Our end result was a 20% increase in monthly revenue while still operating at over 90% occupancy. Right where we want to be going into spring.
      If your competitors are fully occupied and you are fully occupied, get those existing customer rates up to market level!

      Comment


      • #4
        Every couple of year? You are behind then. You need to raise rates every 9 months.

        Comment


        • #5
          I would recommend at least to do an internet search of storage competitors within 5 miles and see what their rates are and adjust accordingly!
          Don't put off until tomorrow, what you can do today.

          Comment


          • #6
            Here's my situation: we raised rents for new customers only last year in September. That didn't make much of a difference for us, because we are in our slowest season (think winter hell in Alaska).
            We are moving foward with sending letters out to all tenants that have a grandfathered rate (not the street rate). They will have one month to decide if they'd like to stick with us (still the cheapest in town) or move out. Some are paying nearly 50% of the street rate from the 1990's. I understand that this should have been a gradual raise in rent, but we cannot keep doing business this way.
            I have only been managing these sites for four years, and last year was the first rent raise (for new tenants only).
            I think it's time. Thoughts? Suggestions?
            Thank you!
            -Elizabeth

            Comment


            • #7
              Increase rates annually on new and existing customers. A dollar or two here and there won't run anyone off and it'll add up over the years. Existing tenants who are staying very long aren't going to move just because you go up $1-2 per year, and if they do it's okay, you can rent at full price to a new customer. Why would you choose to subsidize the rental for people? Charge market rates and get a return on your investment.

              Comment


              • #8
                Originally posted by Willar View Post
                A dollar or two here and there won't run anyone off and it'll add up over the years.
                We have actually always had the opposite issue. We used to get far more people complaining about a $1-$2 per month increase because they felt we were nickel and diming them. We now raise everyone at least 5% and get far fewer complaints.

                Comment


                • #9
                  You need to be raising rates every 9 months or so. The cost to doing business goes up and vacancy goes down.

                  Comment


                  • #10
                    We just did a 25% - 27% increase across our company - 53 locations! Tenants are moving out in droves. And our street rates are so high that our former approach of "Would a smaller size be a consideration for you?" to try and retain the tenant is no longer effective, since the smaller units are already priced higher than most are currently paying. I've been in this industry for almost 16 years and I've never seen anything like this.
                    "Anything worth doing, is worth doing right." ~Hunter S. Thompson

                    Comment


                    • #11
                      ResMgrs- moving out in droves? Are you ok with this? I saw about a 5% loss of existing tenants last year with a 20% rate increase. That is about 50 tenants. It was exactly what I was trying to achieve. Hope it's your goal too!
                      It is pretty awesome to have everyone at street rate though

                      Comment


                      • #12
                        Originally posted by helenatim View Post
                        ResMgrs- moving out in droves? Are you ok with this? I saw about a 5% loss of existing tenants last year with a 20% rate increase. That is about 50 tenants. It was exactly what I was trying to achieve. Hope it's your goal too!
                        It is pretty awesome to have everyone at street rate though
                        Nope, we're not okay with it at all, but it's outside of our control; we're hourly employees and don't set our prices.

                        Naturally, the goal is to replace them all with the higher paying tenants, but until we enter the busier season I don't know if it will pan out. There are relatively few houses available in our area right now, and builders are holding lotteries and other selection schemes to select buyers. Then there's the supply chain stuff, too. It's fascinating and troubling at the same time.
                        "Anything worth doing, is worth doing right." ~Hunter S. Thompson

                        Comment

                        Latest Topics

                        Collapse

                        Working...
                        X