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Pricing For Profit

Written by Chuck Vion on February 17, 2017 under Pricing

Pricing For Profit

Article Contributions by: Dr. Warren Lieberman - President at Veritec Solutions

Predictive Pricing Analytics

Five of your sixty 5 x 10 climate-controlled units are vacant. Yesterday, the self-storage facility down the street decreased its monthly rate on its 5 x 10 climate controlled units by $7 so that your units are now $5 per month more expensive. Do you adjust your monthly rate or leave it where it is?

As self-storage companies incorporate systematic, dynamic, and data-driven methods into setting move-in rates and rent increase to existing customers, they typically realize sustainable increases in profits that are greater than anticipated.

Pricing analytics are frequently grouped into three categories:

Descriptive Analytics

Descriptive analytics frequently involve reports that illuminate historical trends and highlight current situations. Such reports are intended to help identify future opportunities.

Predictive Analytics

Predictive analytics focus on estimating/forecasting future events; alerts can be specified that notify staff when actual events are unfolding differently than anticipated, identifying potential opportunities for pricing actions to provide value.

Prescriptive Analytics

Prescriptive analytics build on predictive analytics, providing specific recommendations for pricing analysts to consider.

The ability to access historical and current transactional data, as made possible by Property Management Systems such as SiteLink, has enabled small portfolio self-storage firms as well as the very largest firms to benefit from pricing analytics in each of these three categories. Revenue increases of 5 to 9 percent, or more, are being achieved. And, since much of this incremental revenue drops straight to the bottom line, the positive impact on profit is magnified substantially.

But, it must be emphasized, Pricing analytics are not substitutes for the expertise and experience of staff. Rather, they provide their greatest value when used by staff to prioritize and focus their attention on those decisions where the opportunities for increased revenue/profits are most significant.

As self-storage operators better understand and implement core pricing principles, we expect they will increase their profit margins to levels far greater than they initially expect. There truly is “gold in them thar hills!” if you know where to look.

Article Contributions by: Dr. Warren Lieberman - President at Veritec Solutions

Want To Learn More?

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Watch the on-demand webinar Pricing for Profit: Analytics, Strategies & Tactics now. Learn new ways to think about pricing, leverage your data and identify specific opportunities to revise your pricing policies and tactics.

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