A Favorite Day of the Week?

by Alden Chang

The cadence of the week is all but too familiar: Monday always comes to mind as the somewhat dreaded start of the work week. We then strive towards “hump” day Wednesday, followed by a more anticipatory “TGI” Friday. And finally, there’s the weekend. But with our connected devices, work even continues through the weekend.

The question for the Self-Storage provider, then, is what time of the week do customers start checking for their storage needs? And when do they really evaluate pricing for their storage needs?

Trying to Understand the Consumer

It would be nice if we could have a detailed consumer study to answer those questions. But there are many variables in play. Demographics, for one. Maybe millennials check prices the day of their intended move-in? They are connected, real-time, and maybe last-minute. Instant gratification.

Baby boomers perhaps want more time to study and decide. A few days in advance might be good.

Or, are these just all stereotypes? What about gender, the overall economy and the local market? A simple day of week question quickly becomes complicated.

Another Way Forward

What about simply looking at what your competition is doing? Being responsive to their pricing changes may be all you need to remain competitive.

Dr. Warren Lieberman reviewed price change data for hundreds of Self Storage companies. He analyzed web-based prices of units for which prices were displayed on a company’s website for at least 300 days in 2018. Then he zeroed in on the extent to which price changes were made on certain days of the week and whether there were significant differences between companies.

(See more of Warren’s analysis in his article “Pricing and Revenue Management: Recent Trends in Self Storage”, published in the Florida SSA INPRINT magazine.)

Price Change Frequency by Day of Week

Indeed, Warren found significant variation as highlighted below with two Self Storage operators.


Operator “A” happens to execute a lot of price changes and makes about the same number of changes every day of the week, including weekends. That so many price changes are made on weekends suggests that the company may be relying on an automated method to make those changes–that is, the price changes result from a predetermined algorithm without any staff review and input.

Contrast that with Operator “B”, another company that makes a lot of pricing changes, but more than 65% of its pricing changes are made on only two days of the week, Wednesday and Saturday. Perhaps Operator “B” is using a combination of staff and automation to change prices.

The Opportunity for the Self Storage Operator

More than ever before, it is now possible to better understand the specific pricing tendencies and approaches of your competition so that you can adopt appropriate pricing strategies and tactics that will allow you to be more successful.

There are price optimization systems that incorporate both automation and effective pricing strategies. These systems can automate the competitor price collection process, factor those prices into a decision-making method, and ultimately come out with a more optimized price.

Furthermore, these systems may have “pay as you go” pricing to help alleviate your own financial risk. In fact, an increasing number of self-storage companies are taking advantage of the availability of such systems and data.

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Self Storage Value Pricing On The Internet

by Alden Chang

We are pleased to announce that Dr. Warren Lieberman, President of Veritec Solutions, will be a panelist on what is an increasingly critical topic, Value Pricing on the Internet, at the SSA 2019 Fall Conference & Trade Show. The panel will be held on Thursday, September 5th, at 8:45AM in the MGM Grand, Las Vegas.

Jim Mooney, Jr., of Freedom Storage Management, will be moderating the panel.

Managing the Transition to Value Pricing

We all know that the industry is moving towards self storage value pricing, also known as convenience pricing or differential pricing.  That means the more desirable or convenient units are rented for higher rates, all within each unit group.

But then, a central question becomes how can self storage operators manage this transition to altogether increase revenues, improve customer service and benefit the industry as a whole. One area of particular concern, and opportunity, is how to best integrate value pricing with websites.

  • Are interactive site maps the future?
  • Should web sites offer the opportunity to upgrade prior to or after a reservation is made?
  • What are the elements of customer psychology to consider?

Warren will be joining a panel of industry experts to address these and other critical questions,
making this a session not to be missed!

Register now for the SSA 2019 Fall Conference & Trade Show at the MGM Grand in Las Vegas!

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Clearing Up the Month Boundary Myth of Self Storage

by Alden Chang

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.

Conclusion

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.

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