Guest Post: Oh No You’re Full! By Jon Wyles

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    When I started in self storage I attended the Self Storage Conference and Trade Show in Las Vegas. I had only been in the business for a short period of time and had one facility near Liverpool in England. I met a seasoned self storage operator and we got chatting. He asked me how it was going. I said “It’s great! The business is booming and we are full, we are having to turn them away”. He looked very unimpressed, so I asked him why. His response was, “If you are full you are not charging enough. You should never be full, you should be 85-90% full”. When I went back to England, I put all my prices up. It paid for my visit to the Trade Show and more!

    This is a simple but important point and relates back to my previous article about pricing policy (Are You Paying the Price for Not Knowing the Price?) and knowing your competition. One easy way of knowing whether you are too cheap is to look at your own occupancy. If you are full then put the price up, but don’t just look at the overall picture, look at the individual unit sizes. It might be that you are not charging enough for a particular room size.

    The fundamentals don’t change; you need to understand the price point in your market. But be careful you don’t increase the price by too much and end up with the opposite problem.

    I have recently been working with an operator who was full and had not put his prices up for years. I did the competitor price survey and told him to put his prices up as he was leaving too much on the table. He hesitated and said “but they will all leave”.

    They won’t leave. A few might, but actually if the process is managed correctly, you will have more revenue and some additional vacancy that you can sell at the new price. It’s a win-win.

    It is important to manage implementing a price rise in a consistent and professional way. Your Customer Agreement should have a clause relating to changing a customer’s price. This will probably include a notice period and written notification. Read your Agreement and follow the provisions.

    How this correspondence is worded is important. You are about to give your customers some news they don’t want to hear so wording the letter or email correctly is vital. There should be a reason given.

    How often should you implement a price rise? This will depend on a number of factors and where you are in the life cycle of the business. I would never put a price up within six months but would always implement a price rise within a year of occupancy.

    How much should you increase the price by? Again, the same considerations apply, but my rule of thumb is 5%. You can be more aggressive, or less. This will depend on the alternatives a customer has. If you are still reasonably priced in your market and the customer still has the requirement then it is unlikely they will move out. Don’t forget it will cost the customer time and money to move. It’s a hassle they could do without.

    You should measure the effect of a price rise. Record the revenue and occupancy before and after and analyse the results. Look at your move-outs immediately after implementing the rise and see if there is a spike in move outs.

    If customers do give notice, then ask them the reason why. If it is the price rise, then maybe take another look at it and negotiate a compromise.

    Price rises should be an Integral part of your pricing policy, and if managed correctly you will never be full!

    Jon Wyles is the founder of Smart Storage, a five store business. He is now a self storage consultant based in Vancouver, helping self storage businesses across Canada, USA, Asia and Europe.

    If you need some help with your pricing policy or any other aspect of your self storage business, why not give Jon a call and see how he can help you:

    Call: (+1) 604 628 1749, email:mailto:jwyles@simplystorageexpert.com Web:www.simplystorageexpert.com

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