Pricing is such an important endeavor. Yet organizationally, assigning the Pricing role and determining who should be held accountable for Pricing decisions can often be tricky. Pricing responsibility is especially an issue for large Self Storage companies. These organizations can manage hundreds or even thousands of stores.
A core element of this decision often boils down to whether regional “field” staff versus centralized “corporate” staff will assume primary responsibility.
Argument for Regional Pricing Responsibility
Regional staff may include senior positions such as vice-presidents and district managers. Their main argument is they know their area better than any centralized group would. Only they:
- Really know the customer. They have direct interaction with customers and know their price sensitivities.
- Actually know the competition as they have “boots on the ground”. Therefore they know how to better price competitively.
- Have superior operational understanding. They know their cost structures better than anyone else and can better factor those into Pricing.
- Can respond quicker as they are closer to the customer, competition, and operations.
Argument for Corporate Pricing Responsibility
Conversely, the arguments for corporate are that have the “big picture” perspective . Only they:
- Can ensure corporate-wide marketing and branding consistency, of which Pricing can be a key component.
- Have the company-wide view of the competition. Regional competition may or may not be an immediate concern.
- Are well-positioned to balance region to region factors, of which pricing may be one.
- Can assess any scale considerations.
In our experience with clients using the Veritec Revenue Management System (VRMS), we find that, given the right analytical decision support tools, it is far better for primary responsibility for Pricing to be assigned to corporate staff, so long as field staff understand and contribute the type of input that is needed and expected from them.
Pricing is inherently a quantitative and analytical task, in combination with key elements of consumer psychology. When Pricing is the primary responsibility for an individual or department, decisions are typically more timely, and profitable, than when Pricing is only one of many responsibilities. Furthermore, when these other expectations include operational and customer service responsibilities, such efforts will often overshadow the Pricing responsibility and capture most of the attention of the individual or department.
However, for corporate staff to have maximum success with Pricing, the Self Storage organization must have the following in place:
- A data-driven Pricing methodology, measurement, and information system.
- Easy access to data for all stores across the portfolio and the ability to implement decisions efficiently; that is an information system with strong prioritization and workflow.
- Strong mechanisms to encourage, obtain, and use feedback from all relevant parts of the organization, especially field staff.
Doing so will best utilize all your assets, both centrally and regionally.
While much of this guidance is applicable to smaller Self Storage organizations (and yes, even single-store organizations), there are critical caveats that need to be made, as Pricing will necessarily be only one of many responsibilities assigned to an individual. We’ll cover those in more detail in a future blog, but perhaps most critical, is that Pricing responsibility be assigned to someone who has good quantitative and analytical skills in combination with a strong understanding of the business.