Non-cash and cash-based incentives versus pricing concessionsat the time of renewal was the hot topic for the roundtable comprised of Scott Morrison, senior vice president, operations, Legacy Partners; Patty Garver, pricing manager, Laramar; Stacy Westbay, president, Revenue Edge, LLC; and Mike Clow, senior managing director, Greystar. Here is where it netted out:
- Avoid getting sucked into the concessions game. Train leasing staff to explain the difference between 2-months free rent at a competing property and your monthly rate. The statement “it is like 2-months free rent” can go a long way with a resident or prospect
- At the time of renewal, non-cash incentives are very effective. It not only helps justify the rate increase by offering a greater perceived value but encourages the resident to sign the renewal sooner. For example, “if you renew the lease within the next two weeks, we can provide you the renovation package for free”
- One advantage of a revenue management system is to get away from concessions – a common and costly crutch often used in the leasing office. Ensure your staff knows how to sell the rate increase by understanding the pricing system, sell the value of the property as well as educate the resident why your property delivers greater value than the one offering two months free rent
- Adjusting pricing should be a last resort at an under-performing property. Look closely at all 7 (not just 4) P’s of revenue management before changing your pricing strategies - product (units, community), people (well-trained leasing staff), promotion, policy (a ‘no-pet’ policy in a city full of pet lovers), post-selling (strong resident relations and customer service) and then pricing
