Winning in today's self-storage market requires a savvy solution to outwit the competition. One way to do this is to use a value pricing strategy that lets tenants select units based on specific amenities. This "tiered" approach appeals to customers seeking premium storage solutions and also drives additional revenue by enabling storage operators to capitalize on the value of their most in-demand units.
So, how can you use value pricing to gain an edge on the competition? Keep reading to learn more about it and how it can be a powerful tool for driving growth and success in your business.
What is Value Pricing?
Value pricing, or "value-based" pricing, differs from traditional, “cost-based” pricing in that it focuses on more than just the unit price. Implementing a value pricing strategy involves offering a tiered pricing structure that varies based on the amenities offered within a particular unit type. Amenities could include the unit's location, as well as other convenience or security features such as climate control or Bluetooth smart locks.
Think of good, better, best-type options for prospective tenants... with "best" options commanding the highest price points. With this tiered pricing structure, storage owners can maximize their revenue potential by aligning their pricing with the "perceived value" of each unit.
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What Are the Benefits of Value Pricing?
Enhanced Revenue Potential
A value pricing strategy allows you to maximize your facility's offerings without having to resort to discounting units. As a facility owner, you can raise rates for premium units to increase total revenue and profit margins.
Storage units with unique features like climate control, 24/7 access, or premium locations typically come with higher rates, and tenants are generally willing to pay more for added convenience and/or premium features.
Increased Tenant Satisfaction
Value pricing can improve the online rental experience by empowering tenants with the added convenience of being able to select the features and price points that best suit their individual storage needs.
Making it easier for tenants to select units based on their amenity or budget preferences leads to higher conversions and ultimately increased tenant satisfaction. Implementing this strategy can help broaden your customer base and boost brand loyalty among current tenants.
Stay Ahead of Competitors
In a competitive storage market, a value pricing strategy highlights your facility's unique advantages, justifying premium rates and attracting tenants who prioritize those specific features.
Unlike competitors who solely focus on undercutting prices, value-based pricing allows you to stand out from the competition by highlighting unique features and amenities. This positions you to attract tenants willing to pay a premium for added value.
Using Value Pricing At Your Self-Storage Facility
Evaluate Unit Value
Start by analyzing what makes each unit, or unit type, at your property unique to determine its perceived value. Consider elements like size, unit location, accessibility, and extra features such as climate control or upgraded security. Once you have these numbers, you'll be able to define your unit tiers and adjust prices accordingly.
Identify Market Segments
Recognize the various segments within your market so you can define a target. Understanding your target market is crucial for implementing an effective value pricing strategy. Tenants will have varying levels of price sensitivity and preferences for amenities. Some may prioritize cost, while others will pay more for certain features.
Collecting tenant feedback allows you to split your market into groups based on their preferences and preferred price points. This will enable you to tailor your pricing strategy to each group's needs, maximizing customer satisfaction and revenue potential.
Effectively Communicate Value
Use your website to convey the advantages and value of premium units to potential tenants. Promote the features that warrant the higher price point and how they address customer needs. Effective messaging can help bridge the divide between price and perceived value, encouraging customers to embrace the higher cost.
Regularly Monitor and Adjust Pricing
Value pricing is not a static approach. You'll need to frequently track market trends, client feedback, and occupancy rates and adjust prices accordingly. To be successful, evaluate your products, identify customer groups, communicate effectively, and adjust prices regularly.
Tenant Inc.'s Mariposa self-storage website solution simplifies implementing value pricing at your facility. Contact us today for a free demo to learn how to use value pricing to outsmart your competition.
