Cost Per Rental?

Marketing is often getting cut because it is viewed as an expense when actually it should be viewed as an investment. You have to advertise to make the phone ring right? More often than not if people actually knew their “cost per rental,” I think less and less people would view marketing as an expense.

What is cost per rental in the self storage industry? First, you must know the average value of a rental. I would bet that most of us are going to find our storage unit rentals value anywhere from $800 to $1000 by the time we figure average length of stay, packing supplies sold, insurance, etc. Another factor that would be valuable to know is what our average self storage unit “size” rental is worth. In other words, typically what do we average when renting a 10×10? I would definitely recommend knowing this, especially with the new self storage marketing mediums available that are “pay per performance.” In most cases, paying $100 per rental should not be an issue but if my average 5×5 rental in a rural market is typically only worth $100, might not make sense to pay per rental on those particular units depending on the per rental cost.

Anyways, back to the cost per rental.

If I am paying $100 per month to a marketing source that is generating me 2 rentals, my cost per rental is $50. My average value of a rental is $800 therefore I am paying $100 to make $1600 (before factoring out any other expenses). When looking at the volume of rentals generated, it is easy to see why marketing mediums get cut. But when probing deeper and looking at the return generated (because I know my value of a tenant), I think I’ll keep that marketing source.

Something to consider next time you are looking to cut “expenses”.

1 Response

  1. tom

    I agree with you that it is an investment. You have to advertise to increase your rentals. Too much emphasis is made on the initial money being paid, when in actuality there are alot more variables that go into this decision. Therefore when considering how much advertising is bringing in compared to the amount of traffic that you are receiving, it whould always be considered an investment for the good!

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