What time of the month do Self Storage Operators really change their prices?
Anecdotally, we often hear that Self Storage operators are more likely to revise prices at the month boundary. By that, we mean either towards the end, or at the beginning, of a given month. Intuitively, this makes sense, as there are several business activities that occur at this time:
- Staff meetings that often cover topics such as sales goals, objectives attainment, and operational improvement.
- Month-end closing activities for accounting, which includes reconciling inventory discrepancies, depreciating fixed assets, posting billing documents, and payroll.
- Important financial statement preparation which occurs at quarter’s and year’s end.
Given such activities, it makes sense that price setting activities would occur in tandem as well.
Dr. Warren Lieberman, in his article “Pricing and Revenue Management: Recent Trends in Self Storage” published in the Florida SSA INPRINT magazine, reviewed the price changes data for hundreds of Self Storage companies. He found that while there is certainly a lot of truth to this, it is not as pronounced an effect as some might think.
He analyzed the web-based prices of units for which prices were displayed on a company’s website for at least 300 days in 2018. In the chart below, we display the results for 10 companies, each with at least 100 stores across the U.S. The average number of unit types (for example, 5′ x 5′ climate controlled and 10′ x 10′ non-climate controlled) per store ranged from six to over 30 across the ten operators.
Indeed, Self Storage operators make many price changes throughout a given month.
In the chart below, “Month Boundary” comprises the first three days of the month, and the days from the 28th onward. “Mid-Month” consists of all the other days. The first bar on the left, the “Base”, shows the proportion of Month Boundary days (77) in dark blue to Mid-Month days (279). Month Boundary days are just under 22% of total days in a year.
C1 through C10 are the ten Self Storage companies. The dark blue bar shows the proportion of price changes at the Month Boundary compared to that of Mid-Month.
The chart clearly shows that in total, the companies make more price changes during Mid-Month than at the Month Boundary. But, the proportion of price changes made at the Month Boundary (in a year) exceeds that of Month Boundary days to the days in a whole year.
That is, while the companies are certainly more active with changing prices at Month Boundary, the increased activity is not so great as to be the dominant driver of price changes.
Note that Companies C7 and C10 were somewhat more active with making price changes at the Month Boundary. Approximately 30 percent of their price changes were made on these days. Company C6, on the other hand, executes price changes more evenly throughout the month.
Regardless of the bias towards Month Boundary or Mid-Month, price changes are being made throughout the month. We at Veritec Solutions believe are several drivers enabling such activity:
- Technology is enabling more automatic pricing data collection, especially competitor data.
- Self Storage pricing software, which often encompass such technologies, is enabling more rigorous analysis of pricing data to derive better price points.
- Companies, then, increasingly integrate pricing activities into their regular business processes. Pricing becomes a discipline, not an “one-off” event.
As a Self Storage operator, now may be a good time to evaluate your own pricing tactics and strategies to identify potential improvements. Developing an explicit pricing strategy and process discipline while leveraging increasingly available technology can have a significant positive financial impact. Even small improvements can add substantially to the bottom line.