How often have you asked yourself whether you are discounting too much? Or whether your unit prices are set too high? Or whether you can push your prices before your occupancy rate suffers? How much can you increase your existing customers’ rates before they move out? Is it possible to increase their rates beyond the posted street rates? How much of a premium can you charge to your competitor?
Extra Space Storage, the self-storage industry’s second largest company, asks these questions regularly and is moving closer to finding the solutions.
In most businesses, revenue and expenses are the two drivers that determine the bottom line. The current economic conditions have made it even more important for every facility manager and owner to manage expenses. While expense management is important, revenue management is crucial. As owners of storage facilities, we all watch expenses in order to increase the net operating income of the site. We believe in the saying, “A dollar saved is a dollar earned.” Our revenue management team also knows that, “Every customer’s rent increase is many dollars earned.”
Why Use Revenue Management?
Extra Space Storage has led the public self-storage REITs in average same-store revenue growth since the first quarter of 2006. This was not accomplished by manually reviewing rates for 400,000 customers. It was done by a group of highly skilled analysts and statisticians, utilizing thousands of tests and “revenue experiments” that we call “revenue management.”