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Rate Management: When should you increase (or decrease) rates?

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  • Rate Management: When should you increase (or decrease) rates?

    Hi everyone!

    I am writing an article on rate management and when you should increase (or decrease) rates. I wanted to get some information from other owners and managers in the industry. So, how do you decide when to change your rates? In addition, when you do increase (or decrease) rates, how do you decide the percentage or dollar value of the change?

    Thank you in advance for your help and input; I look forward to reading your responses!
    Alyssa Browning
    Assistant Marketing Director
    Easy Storage Solutions
    alyssa@storageunitsoftware.com
    888-958-5967 ext. 201

    www.storageunitsoftware.com

  • #2
    I'm just beginning the rate increase process. There has not been an increase here at my facility since 2012, but, for whatever reason, not all tenants were included. Several that have been here since the 90's have never had one. I did not start working here until late 2013, so this will be my first rate increase. I had a meeting with the boss last week and we decided it was way past time for an increase, and they would like them to be done about every 2 years. We are raising them 15%, and I will still be slightly lower than several facilities near me. I got information from this site suggesting a larger increase at first, followed by smaller ones (6%-8%) thereafter, so that will be my goal.
    The only time I have ever "decreased" a rate was when running a special on a small unit that I had a lot of and wanted to fill them. I cut that rate $10/mth and the tenant will keep that rate as long as they are in the unit. Most of those tenants have either traded up in unit size, or vacated.
    Too many freaks, not enough circuses.

    Comment


    • #3
      Thank you DairyGirl! That is great information!
      Alyssa Browning
      Assistant Marketing Director
      Easy Storage Solutions
      alyssa@storageunitsoftware.com
      888-958-5967 ext. 201

      www.storageunitsoftware.com

      Comment


      • #4
        I have a question concerning rate increases. We do them and always have a regular intervals. However we just recently acquired 2 stores that do pretty extensive outdoor and Indoor car parking. These users tend to be pretty seasonal, so any thoughts on how best and when best to do increases on cars? The indoor especially as they tend to be October - April people? Some stay all year but a majority do not. Thanks

        Comment


        • #5
          Rates dropped in our area due to the poor economy. Sad, but true, the big box companies drove down the prices.

          Comment


          • #6
            Storage-gal. Have you tried having meetings with other local management? Our area has been flooded with new storage and many big box companies. We have not changed our prices though. I have regular times I meet with other local managers to discuss these issues. Unfortunately they want you to drop your prices and fall off the map. If you give in how long will you be able to hang in there?

            Comment


            • #7
              My location helps with any increases. Very upscale area. I have done 2 increases since I took over 5 years ago and we are getting ready to do it again. I do hope to lose some PITA tenants with this increase. We do not do a %. Dollar increments. There are facilities in worse parts of the city that still charge more than we do. We have already raised street rates so that new tenants pay the higher amount. Some of my existing tenants have picked up extra units and whined a little with the higher rate and I told them that their existing rate on their unit will go up soon. Our large units are very popular. My 10x30 is going from $215 to $240 and my 10x40 is going from $265 to $310. 10x20's, single or double door, went up $10 each.
              "Never let the inmates run the asylum!"

              Comment


              • #8
                At our 3 location we have RV & Self Storage. Traditional self storage customers, first increase at about 10% on the 7th month of occupancy and every 9 months after that at 10%. RV Storage, on the 7th month about 9% and then 8% every year after that. We've had this in place for a few years now, ya we get complaints, but the overall customers who vacate are few and far between. Generally those we loose are customers that are causing us headaches anyway.
                Thanks,

                -Ryan

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                • #9
                  Complainers/whiners are signs of the drama tenant. To much time wasted on them. After all, they know about the rent and how it will be raised but still move in and then want to snivel. Got no time for them. You don't either. Like you said, "they cause headaches". I have only one time told a tenant that if they didn't like the facility policies then they need to go buy their own facility and run it their way. If they did, every nut job in town would be there.
                  "Never let the inmates run the asylum!"

                  Comment


                  • #10
                    We process existing customer rate increases every month based on yearly anniversary date. The increase is typically $5 - $9, based on unit size, type and occupancy. If we have someone who is slow pay or generally high maintenance in a highly occupied size and type, we will sometimes raise their rate as much as $12. This is our attempt to push them out or get them to down size to something more affordable.

                    It seems most of the posts have been in regard to rate increases for existing customers. We are interested in learning how frequently standard rates are increased or decreased and how you determine what the standard rate should be. This would be the rate for new customers.

                    Do you advertise standard rates and internet special rates on your website?

                    When you process existing customer rate increases, will you raise their rate above the current standard rate or do you cap increases at your current advertised standard rate?

                    Comment


                    • #11
                      Originally posted by pacnwstorage View Post
                      My location helps with any increases. Very upscale area. I have done 2 increases since I took over 5 years ago and we are getting ready to do it again. I do hope to lose some PITA tenants with this increase. We do not do a %. Dollar increments. There are facilities in worse parts of the city that still charge more than we do. We have already raised street rates so that new tenants pay the higher amount. Some of my existing tenants have picked up extra units and whined a little with the higher rate and I told them that their existing rate on their unit will go up soon. Our large units are very popular. My 10x30 is going from $215 to $240 and my 10x40 is going from $265 to $310. 10x20's, single or double door, went up $10 each.
                      How does your facility decide when to do rate increases Pac? Do you have a set schedule (i.e. every year, every 2 years etc.) or do you increase rates based on competition and the economy?
                      Alyssa Browning
                      Assistant Marketing Director
                      Easy Storage Solutions
                      alyssa@storageunitsoftware.com
                      888-958-5967 ext. 201

                      www.storageunitsoftware.com

                      Comment


                      • #12
                        Every 6-9 months like clockwork. Some tenants HATE it but it's based on occupancy level and street rates.

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                        • #13
                          Originally posted by badgorillawife View Post
                          Every 6-9 months like clockwork. Some tenants HATE it but it's based on occupancy level and street rates.
                          Thank you for the information!
                          Alyssa Browning
                          Assistant Marketing Director
                          Easy Storage Solutions
                          alyssa@storageunitsoftware.com
                          888-958-5967 ext. 201

                          www.storageunitsoftware.com

                          Comment


                          • #14
                            My process is a bit complicated. I run a report monthly, dump into excel and I have working formulas that do a few functions for me. I.e how long since last increase for their unit and any any other unit they rent, $ difference from street rate, projected increase (diff/2) est increase. Then I do monthly comparisons on facilities within 5-10 mi. (More spreadsheets) if the average is below our street, exempt from rate this month, of over, then they are flagged for an increase. This also helps with increasing ( or decreasing) street rates. when i got here, there had not been increases in over 7 yrs (on street or tenant) that has changed over that last 7 years and now every account has been touched and no one in over 2 yrs with out an increase. We guarantee our rates for a year. I have my report parameters set to look at any tenant w/o an increase for a year with a project increase of 5%.

                            AS for RV - We have a wait list in our area up to 2 yrs on some spaces. to keep the season people here we offer yearly prepay deals. That has decreased the number of tenants that move out and roll the dice on a space when they get back to town. We now only have 1.

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                            • #15
                              Thank you to everyone who gave some input! This was absolutely fantastic information and very helpful! Have a great weekend!
                              Alyssa Browning
                              Assistant Marketing Director
                              Easy Storage Solutions
                              alyssa@storageunitsoftware.com
                              888-958-5967 ext. 201

                              www.storageunitsoftware.com

                              Comment

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