Did you know that 80% of companies fail to meet their cost-reduction targets, indicating potential shortcomings in revenue management practices?
If self storage operators don’t manage their revenue effectively, they could:
❌ Miss out on revenue opportunities.
❌ Increase operating costs.
❌ Reduce their competitive edge.
❌ Encounter cash flow problems.
❌ Experience long-term financial losses.
The self storage industry is highly competitive, so you could face disastrous consequences if you don’t optimize your business’s revenue.
As a self storage facility owner myself, I have learned much about how to manage and optimize your revenue to run a significantly profitable business.
In this article, I’ll unpack what revenue management is, how to optimize it, and the best revenue management system to help you build a profitable self storage business.
What Is Self Storage Revenue Management?
Source: Freepik
Self storage revenue management involves optimizing pricing, occupancy, and profitability for self storage facilities.
It uses data-driven techniques, market analysis, and technology to maximize revenue while balancing customer demand and operational efficiency.
The Four Key Components of Self Storage Revenue Management
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Now that you know what revenue management is, let’s unpack the four key practices you should be aware of:
➡️ Dynamic pricing
Source: Freepik
This refers to modifying what you charge per storage unit in response to real-time factors such as:
👉 Demand.
👉 Unit availability.
👉 Seasonal trends.
👉 Your facility’s location.
You can use data analytics and technology to align your pricing with current market conditions. This approach ensures your pricing remains competitive while maintaining a balance between supply and demand.
For example, if your facility has high occupancy rates for a specific type of storage unit, you can increase prices for that size to capitalize on demand.
➡️ Demand forecasting
Source: Freepik
Demand forecasting involves predicting future customer demand for your storage units based on historical data, market trends, and external factors. It helps you anticipate and maintain high occupancy rates.
Let’s say it’s summer, and you own a storage facility near a university. You could use demand forecasting to predict increased demand for smaller units as students move out of their dorms.
This insight could lead to higher pricing for these units or targeting marketing campaigns to attract these customers early.
➡️ Inventory control
Source: Freepik
Inventory control involves managing the availability of your storage units to optimize occupancy rates and maximize revenue.
This process includes tracking unit availability, monitoring demand, adjusting pricing, and ensuring that different unit sizes and features are used to meet market trends and generate profit.
Additionally, inventory control involves quickly preparing recently vacated units for new customers to move into to maximize occupancy.
An example would be a self storage facility operator who notices that their ground-floor, climate-controlled units are consistently in high demand.
By closely monitoring occupancy rates, the operator could increase the rates for these units while offering discounts on second-floor, non-climate-controlled units to maintain revenue. They could also build more of these units to increase their profits.
➡️ Customer segmentation
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Customer segmentation is when you divide your customer base into distinct groups based on customer behavior, needs, and demographics.
This segmentation allows self storage operators to tailor their pricing, marketing, and service strategies to maximize revenue, occupancy, and customer satisfaction.
For example, you could segment your customers into three groups: students, small business owners, and families. By addressing the specific needs of each group, you can improve occupancy and revenue.
💡 Balancing the Customer Experience with Revenue Management While managing and optimizing your revenue as much as possible is important, it’s also essential to remember that your customers are at the center of your business. Their experience should be your priority, along with making a profit. |
How to Optimize Your Revenue
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Below are some strategies to help you optimize your self storage revenue:
💰 Review your pricing strategies
One of the most straightforward ways to optimize your revenue is to review your fee structure and determine where you could charge more.
An alternative to increasing your usual fees could be hiking up late fees, admin fees, or other secondary revenue generators.
You should regularly review your pricing to ensure that it reflects current market conditions, competitor pricing, and inflation.
💰 Consider rate increases
You may be worried that increasing your storage unit rates will cause tenants to move out. However, according to Amercian Realty Advisors, most customers will absorb multiple rate increases rather than move to another storage facility.
If you realistically assess what tenants can afford, consider your timing, and learn how to respond to tenants should they complain about an increase, you can charge more per unit and maximize your revenue.
A self storage facility, Placerville Self Storage, implemented several strategic initiatives over 18 months to optimize its revenue. One strategy was increasing its fees for both new and existing tenants.
This increased the facility’s revenue per occupied square foot from $0.75 to $0.99, marking a 32% rise.
💰 Get the right software
Over 91% of companies report achieving measurable value from their data analytics and software investments.
If you want to manage your revenue effectively, you need the right software. Self storage management software can automatically increase or decrease your prices based on any occupancy rules you set.
For example, when occupancy reaches 80%, you could increase your prices by 60%. Similarly, when occupancy rates fall below 60%, you can decrease your prices by 20%.
Your software can also apply and manage discounts on unit rentals on your storefront or allow you to use discounts as part of a targeted marketing campaign.
💰 Upsell to existing tenants
Upselling is a strategy in which you encourage your current tenants to purchase additional products, services, or upgrades, which increases their overall spending.
This approach optimizes your revenue without incurring the cost of acquiring new customers.
Upselling increases your revenue per tenant, provides cost efficiency, and maximizes facility usage.
For example, if a tenant’s unit is full, you could offer them a larger prorated unit or an additional unit at a discount. You could also suggest upgrading to a climate-controlled unit to protect their belongings from temperature and humidity fluctuations.
💰 Offer a range of products
Providing additional products and services to your customers, such as boxes, packing supplies, and truck rentals, can significantly enhance your revenue while improving the customer experience.
Selling these products and services diversifies your income beyond storage unit rentals and has higher margins, contributing directly to your bottom line.
It improves the customer experience by offering them convenience. Customers are also more likely to choose facilities that offer comprehensive solutions, giving you a competitive edge.
💰 Make buying insurance from you mandatory
Making tenant insurance mandatory for anyone who signs up for your self storage facilities benefits both your business and your tenants.
It provides financial protection and creates an additional revenue stream for you. It also ensures tenants' items are covered, reducing legal disputes or claims against your facility.
Offering insurance policies directly through your facility, often as a partner with an insurance provider, allows you to earn a commission or charge a markup, creating a steady additional revenue stream.
The Best Way to Manage Revenue for Your Storage Facility
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When I started my first self storage business, I found that there wasn’t any software I could use to manage my facility. That’s why I created Stora, an all-in-one self storage management platform that helps you manage your revenue (and so much more).
Here are four ways our tool can contribute to your revenue management:
Effortless online booking: Our platform enables customers to book units online seamlessly, reducing friction in the sales process and increasing conversion rates. This modernizes unit bookings and lead generation, allowing you to make sales efficiently.
Dynamic pricing: Stora allows you to implement dynamic pricing strategies, automatically adjusting rates based on the occupancy you set up. This ensures optimal pricing to maximize revenue.
Storage management software: We automate various aspects of your facility management, including unit allocation, inventory management, access control, and overlocking for non-payment. This reduces manual tasks and minimizes human error, leading to more efficient operations and cost savings.
Business insights: Our business insights tool provides detailed analytics on sales performance, occupancy rates, and customer behavior. These insights enable you to make data-driven decisions to enhance revenue.
Your All-in-One Tool for Self Storage Revenue Management
If you don’t manage your revenue effectively, you could miss out on opportunities to make a profit, increase your operating costs, and ruin your chances of a competitive advantage.
With self storage management software like Stora, you can:
✔️ Streamline your operations.
✔️ Enhance the customer experience.
✔️ Implement strategic pricing.
✔️ Automate your facility management.
✔️ Get real-time data on key performance metrics like revenue.
Our suite of integrated features, such as online sales, inventory management, and business insights contribute to more efficient revenue optimization.
One of our clients, Blockspace, achieved full occupancy and turned a healthy profit in just five months using our comprehensive software. Within weeks, they were online, selling units to students and managing their revenue through our solution.
Visit our website to book a free Stora demo today and learn how we can help you maximize your revenue and run a highly profitable self storage facility.
