Day of Week Pricing During the Pandemic
As self storage operators continually adjust and change their rent prices, the question often becomes not only by how much, but by how often? We looked at any given week, which day or days did operators make those changes. In a previous blog about rental price change frequency, we highlighted two operators with very different strategies.
Contrasting strategies.
The first self storage operator, “A” below, makes frequent price adjustments throughout the week. It makes approximately the same number of changes every day, including weekends. In fact, operator “A” makes quite a few price changes on the weekends. This may be a clue that the operator is using an analytically-driven, automated system that requires little to no staff input.
By contrast, we look at another operator, “B”, who also makes many pricing changes. However, operator “B” makes over 65% of pricing changes on only two days of the week, Wednesday (likely, Tuesday night) and Saturday (likely, Friday night). Operator “B” may be adjusting prices manually, conserving such an effort to mostly two days of the week. Or it maybe using a combination of staff and automation to change prices, factoring its competition’s pricing actions. Note that operator “B” does make pricing adjustments every day of the week.
What about other operators?
Let’s look back at the early days of the pandemic, the first half of 2019. We analyzed self-storage online prices from about 10,000 facilities operated by almost 1,000 companies. Facility locations included those from California, Florida, Georgia, Illinois, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee and Texas.
It turns out that move-in prices on Wednesdays and Saturdays were the most likely to be different from the previous day. Wednesday is the day when large price changes were made most frequently. 60 percent of price changes exceeded 5 percent, versus 47 percent on Mondays.
It will be interesting to see what happens as we lurch back towards normalcy. Will Wednesdays and Saturdays continue to be the most likely days for rent price changes?
It comes down to YOUR competition.
Just because Wednesdays and Saturdays are most likely, it does not mean that is the case for your particular store. What is important are your competitors’ pricing actions. You may be in a situation where your competitors hardly ever change their prices, in which case you may have an opportunity to create a competitive advantage through strategic pricing adjustments.
On the other hand, you may be faced with competitors like that of operator “A” above. Here, it is imperative that you stay in touch with what they are doing or you may lose your competitive edge.
Some days, your competitors may be undercutting you on price, potentially lowering your occupancy rate. Other days, you may be leaving money on the table by charging too low of a rate. If such miscalculations are happening on a daily basis, the cumulative effects can be quite significant, even though the effects may not appear to be too great in the short-term.
Your revenues and occupancy rates may be severely impacted without you realizing the extent or severity until it is “too late”. This is a time where data-driven systems, that not only advise you on pricing, but also provide you with insight into what your competitors are doing, can be immensely useful.