When is the best time to raise storage costs?
As with every other business, at some point, you will have to think about raising the cost of your storage units. Be it for increased maintenance fees, changes in the economy, or simply to get more profit, a price increase is a natural flow of events. However, it is crucial to carefully think about when is the best time to raise self-storage costs. Furthermore, you also have to think about which storage units should be affected and by what percentage.
Luckily for you, we are about to analyze this entire process and provide you with valuable information that will help you to make an informed decision.
Why raise storage costs?
The first reason for raising storage costs is to increase your return on investment (ROI). Every business has to grow and expand, and the price increase is one way to do it.
Furthermore, running a storage rental business also costs money. You have to keep all of the units in top condition, improve on-site security , clean and maintain the units, and much more.
Also, we have mentioned the economy as well. If the cost of living goes up, the prices will have to jump as well. Otherwise, you will not earn enough money to keep the business running.
With that in mind, the best time to raise storage costs is when:
- You are not charging for the full potential of your storage units
- Maintenance fees and other expenses are starting to take more and more money out of your budget
- The economy forces the change on you
Besides these 3 factors that affect the price increase, there are a few more things to consider
When is the best time to raise storage costs?
Every owner of a storage rental business has to deal with the same problem - occupancy rate. If you just started, chances are you will have more empty storage units than you would like.
One of the crucial factors is your occupancy rate.
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How the occupancy rate affects the price increase in storage costs?
Every owner of a storage rental business has to deal with the same problem - occupancy rate. If you just started, chances are you will have more empty storage units than you would like.
At this stage, the best tip I can give you is to introduce discounted rates and special packages in order to acquire some customers. However, as your business grows, your occupancy rate will be higher.
The first on the price increase list are the customers that have had discounted prices since the beginning. Naturally, no one likes to pay more for a service he or she has been using for an extended period of time. However, if you structure the discounts properly, you won't have to deal with this issue. You should clearly state that the discount applies only for a certain period of time, like a month, 6 months or a year. After that, regular prices will be introduced.
The easiest way to keep track of the occupancy rate is to properly manage your storage units remotely.
Next, it is important to look at the type of storage units that have the highest occupancy rate.
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Types of storage units
Storage units come in multiple sizes. Different storage units are used to store different items, depending on the requirements.
Figuring out what type of storage unit has the highest occupancy rate is essential information for a price increase. The most popular ones should be the first ones where you raise the costs.
If you have larger storage units that are not as popular as other ones, you can leave them at the same price, or slightly increase the cost to balance them with the more expensive ones, granting you more space for an affordable price.
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Renovations require a price increase
Any improvements that you make to the storage units require a price increase. That goes for the new security system, cameras, gate entrance, or even just a fresh paint job. Even though users might complain when the cost goes up, it doesn't really make sense to complain if the storage units went through a remodel.
The dangers of a price increase
Waiting for the best time to raise storage costs is important. However, do not forget that every price increase has its downsides.
How much should a price increase be?
Everyone is looking for a useful tip about how to set the correct price increase. Going aggressive when raising storage costs is only viable with a high occupancy rate. If you have plenty of customers, you can increase the costs a bit more. Sure, there will be some negative feedback, but the fact is that tenants almost never move out because of the price increase.
The best is to raise storage costs somewhere between 5% and 10%.
Tenants will always complain
Have in mind that tenants will always complain. Still, you will receive a different level of pushback from different types of tenants.
For example, if someone is moving, they might rent storage on a short-term basis. Since the relocation is costly, they have to spend money on packing or movers,calculate moving expenses in advance, and deal with a bunch of other tedious tasks. Any price increase will probably upset them more than others.
However, if you have tenants who are late with their monthly payments, they will complain a lot less. The same goes for tenants who rent storage units with more space vs. those who rent small storage units.
Another difficult group of tenants is those who had special prices or discounts. They probably rent from you because of the price, so an increase is not something they will like. In this case, you can raise the cost of storage units a few times in a row by a small percentage.
Here’s the best time to raise storage costs
To sum up, the best time to raise storage costs is when:
- You want to increase your earnings
- A remodel has been completed and storage units are upgraded
- Economy starts to dictate higher prices
- The occupancy rate is high enough
- Maintenance fees are high
Never fear to increase your rates. Even with all the complaining, it is still your business, and the chances are that every tenant will complain a little, but they will accept the change over time.