How to Handle a Price Increase
Consistent rental rate increases are a necessary and vital part of running a successful self-storage business. Therefore, how do you make the price change as smooth as possible for both your business and your tenants?
Consistent rental rate increases are a necessary and vital part of running a successful self-storage business. Be it due to increase in taxes, inflation, population increases or real estate demand increasing, prices inevitably rise. Fortunately, your tenants probably understand this concept. Therefore, how do you make the price change as smooth as possible for both your business and your tenants?
Here's a 4-step process to get you started on the right foot.
1. Determine When to Increase Self Storage Prices and By How Much
It's important to keep in mind that every self-storage facility is different, and there is no one size fits all solution for everyone's needs. The key is to evaluate how you want to run your business and how your decisions will affect the relationships you have with your customers.
From there, you can customize an approach to fit your business model. This may vary a little bit, but here are a few good industry guidelines:
- Create a yearly price increase schedule for your self-storage facility. You can raise rent with a flat percentage for everyone instead of calculating different dollar amounts.
- Carefully consider the timing of the price increases. A certain period of the year or particular seasons may result in less customer attrition than others.
- Whether you decide to raise your self-storage rates every year or every 18 months, make sure you stay consistent. When people know what to expect and aren't caught off guard, the entire process goes much smoother.
2. Factors to Consider When Increasing Self Storage Prices
Remember that the way you implement changes and how you communicate price increases makes all the difference.
The secret is conveying your message in an honest, clear way that helps the renter understand why the prices are increasing and what they can expect next. Here are a few factors to keep in mind:
- Before you announce price increase to your current tenants, make sure your website is updated. It's important that your site reflects your updated rates, so new renters aren't getting a better deal than tenants that have been with you for years.
- Give special consideration to your long-term and seasonal renters. If they've been loyal to your self-storage business and you value having them, think about offering a small discount as a thank you gift.
- Price increases and complaints go hand in hand. It's a normal part of the self-storage business that everyone navigates from time to time. The truth is, most of the people who complain won't move out; they just want their voice to be heard.
3. How to Inform Tenants of Price Increases, and Which Tenants Should See It First
A few weeks before you implement a price increase for your self-storage business, send each of your tenants a letter explaining the change. There’s no need to go too deep into the details, but giving a general reason can help.
The easiest explanation is to tie the price increase to a property investment. When tenants can see tangible improvements to the property or surrounding structure, they'll be more likely to be understanding of the change.
4. Dealing with Complaints from Customers
One of the best places to start is with your management team. You can support them by talking to them in advance and offering them coaching about dealing with difficult conversations, upset tenants, or other questions that might pop up along the way.
It's not uncommon for tenants to suggest that they move out and find a better deal. Make sure your managers are comfortable addressing this by providing them with stats about the competition.
When managers are armed with this information, they're better able to empathize with your tenants while providing a clear and calm explanation about why your facility is the better choice (even if it means paying a little more each month.)