drive up units more than the interior units.climate-controlled units more than non-climate-controlled units.For example, all other factors being equal, customers value: Value-based segmentation explores these “value drivers.” It classifies units with the optimum level of granularity so that prices are logically positioned with respect to each other based on the implied value or customer expectations of value.
What differentiates the units in the eyes of a customer? Is it size, convenience, climate control, 24-hour access, security cameras, or other factors? As a result, operators mainly use unit types as a proxy to segment their customers that is, they utilize product segmentation.įor product segmentation to work effectively, unit types (i.e., pricing segments) must be differentiated so that segments differ significantly from one to another in the eyes of the customers. Self-storage operators, however, know little about their new customers (although this might change with better data collection in the future). Identifying pricing segments that guide effective sales decision-making and marketing is one of the most critical benefits of any Revenue Management (RM) system. Segmentation is the process of classifying customers into various small groups which have similar or related preferences or desires. Together, these three VBP pillars help you achieve impressive sales conversion rates at higher prices. The value-selling process with tactics based on behavioral economy and psychology.Data-driven algorithms to help determine the optimum prices.Segmentation or differentiation based on the different products you offer.In this blog, we explain that an effective value-based pricing strategy must have three pillars: In other words, you need to justify the price difference relative to the value disparity the customer perceives.
What is important is how your customer perceives the benefit of one product over another. Your viewpoint or your perception of customer value is unimportant in this context. At the core of VBP is the differentiation between the products you are selling.įor differentiation to be effective, your products need to be sufficiently different so that customers can easily perceive the value difference between any two products. Value-based pricing is one of the most commonly misunderstood concepts in the self-storage industry. The most effective way to accomplish this is through Value-Based Pricing (VBP), which provides optimal results when combined with efficient value-selling strategies based on behavioral economics and psychology. Profitable pricing starts with understanding the value you deliver to your customers and matching the right price to this value in every sales transaction. Maximize the return on your self-storage property with time-tested strategies.
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