Is Self-Storage Value Pricing Ready for The Internet?

A while back, we talked about convenience and the Internet. Co-founder of Twitter Evan Williams all but said that the Internet is not about doing new things. Rather, it’s about people doing what they already are doing, but with (much) more convenience. This naturally leads to the question: Is Self-Storage Value Pricing ready for the Internet?

Indeed, online move-in orders have increased dramatically over the last few years. While some self-storage providers focus online more than others, the trend is clear. (Does your company take on-line reservations yet?) In the “Value Pricing on the Internet” panel at the 2019 SSA Fall Conference and Trade Show, where our own Dr. Warren Lieberman was a panelist, the panel cited a number of data points:

• Bargain Storage Move-in Rate from Online Rentals: 97%;
• STORExpress Online Reservation Conversion: 75% in 2019 (to August), 62% in 2018;
• Five Star Storage Percentage of Move-ins from Online Reservations: 22% in2019 (to August), 19% in 2018.

In our last blog we discussed Dynamic Value (or Convenience or Differential) Pricing in self-storage. Self-storage providers have the opportunity to price the same unit type (same size and features) differently due to their convenience (accessibility). The customer, usually at the store, gets to first understand, and then choose the price and convenience level they’d like.

The question then becomes, is the self-storage industry ready to offer value pricing choices on the Internet?

Let’s first look at other industries that are currently incorporating value pricing capabilities into their websites. For many, airlines first come to mind. When you book your flight online, you will likely receive multiple options to upgrade your ticket. Translation: Opportunities to increase your convenience during your flight. These options range from being able to check-in luggage to upgrading your seat to pre-ordering a particular meal.

Two other industries that also come to mind: Hotels and rental cars. When you book an online hotel reservation, the hotel gives you the option to upgrade to a larger room with more accoutrements. Rental car companies do the same. For example, they offer you the options of a larger, more comfortable car, as well as insurance (peace of mind).

The online Value Pricing success factor.

What’s the common element in all those industries? According to Warren, customers of these industries receive prior knowledge of opportunity to enhance the product or service they purchase. (That is, prior to the actual use). When the customer books online, the provider introduces upgrade options and gives the customer the chance to think about it.

Remember Evan Williams, co-founder of twitter. People use the Internet not necessarily to do new things, but rather to do existing things more conveniently.

For the self-storage industry, the customer base tends to be less informed than in these other industries. Value Pricing works very well, even though self-storage operators in general, currently have not incorporated it into their online rental process. (Roughly one-third of customers choose to upgrade.) Our strong expectation is that operators who do so with online Value Pricing will benefit from even greater incremental revenues.

Once Value Pricing programs include an online education component that describes the upgrade options and their convenience benefits, we would not be surprised to see upgrade rates of 40% – 50% at mature stores.

The first foray into online value pricing is The Storage Group’s 3-D Value Pricing Map™. This Map provides a real-time, 3-dimensional and interactive view of a storage facility layout and pricing options. (Think of how online stadium and theatre seating is done.) Veritec Solutions has integrated its self-storage revenue management system VRMS with the 3-D Value Pricing Map™. As such, we continue to look forward to the self-storage industry’s advancement of value pricing online. We are, indeed, very excited about what the future offers.