Revenue Management Myth: I Will Lose Control Over Pricing
“I’m going to lose control over pricing with revenue management.”
Revenue management is a tool that empowers you to make better pricing decisions.
A century ago, people used to write letters by hand and send them by mail. Today, you can write an email to anyone from virtually anywhere in the world at any time from your smartphone, and it will be received almost instantly. Technology propels us into newer and better methods of doing everything—like pricing apartments.
Many multifamily operators are exceptional at pricing. They’ve developed specialized tools and capabilities that deliver meaningful results. YieldStar is designed to emulate your best manager’s approach to pricing decisions—assuming that manager had time to determine the ideal price for every lease and renewal every day, including every possible lease term and move-in date variation that may be requested, while accounting for all near term exposure (vacant, on-notice, and expiring units), recent leasing velocity and rents achieved, renewal conversion relative to expectation, as well as vacancy cost, turn cost, expiration statistics, amenity values, staleness, and the competitive landscape.
It’s impossible for even the best manager to determine as good a price as a revenue management system, because no human can consider all those factors and arrive at the best possible price for every leasing opportunity every day.
A revenue management system can’t, however, operate independently. Companies that get the best results with revenue management have achieved an appropriate blending of advanced pricing science with their operational expertise. These companies exploit the benefits of revenue management, while retaining their distinctive approach to operations. They remain in full control over their pricing, and perceive their revenue management solution to be a tool that simply facilitates better pricing decisions.
I still enjoy hand-writing letters every once in a while. But I sure am glad that I don’t have to.