The Price is Right...or Is It?

Rock bottom pricing. Lower prices. Going out of business. 4 months free. Buy one - get one free. Big discounts. Bargains galore. All signs I have physically seen in the last 24 hours.
Question is, are any of them working? How do we competitively price product in a market like this? Should we be fighting for every penny or slashing rates? Steering a smooth course can be challenging at best.

Some things to consider when establishing price points at your community/portfolio:

Should you lower the price? Do you want to be seen as a discounter?
Consumers don’t care what your “real” price is. The price and the value is what they write the check for. Period. Lowering your price could threaten your brand value, as discounted brands are assumed to be lower in quality. In addition, current residents, your most valued customers, may find themselves paying more for their apartments than an individual walking in off the street. They will resent you, and explore other options, unless an equally competitive offer is made to them to stay. If, for example, the client received one month free at move in, but the current concession is two months, it would make sense to at least offer an additional month free. From the client’s perspective, that is only fair – particularly as they are being wooed by the concession down the street.

Look at your product from your target market’s point of view.
Do a thorough and physical, competition assessment. (Sorry, but the market survey is not going to tell you what you need to know. People pay for and determine value based on the experience received. What kind of experience is being offered at the competitor capturing the leases you should have? Get out and find out.) How are they really pricing their product? Is there a sense of urgency to buy? Is the discount on specific floor plans or an all? Look at it from the consumer’s standpoint – who is offering the best value from their perspective?

Can you prove you are a better value?
Are you better than your competition? Really? If so, how, and how can you tangibly share this with the consumer to build product value? You cannot, for example, say, “We have the best service of all our competitors.” How do you know? Not to mention, everybody says that. You have to prove it. Show the client stats and resident testimonials and be sure to introduce them to other members of the team. Prominently display a resident events calendar in the lobby. Find some residents that would be willing to share their positive experiences and turn the client on to them. Prove it.

Are you panicking?
Exposure is creeping up and conversion rates are down. The end of the month is approaching. Before slashing prices and yelling, “The sky is falling!” do a marketing and traffic assessment. Are you getting enough traffic? Is the product primo? What are they looking for? Is follow up that is relevant to the consumer being consistently executed?

People care about price, but they also care about savings.
Show renters how your community will help them weather the recession. If, for example, you have a tricked out fitness center, don’t forget to share the savings offered in not having to purchase a gym membership. Don’t assume the client understands this inherently. Show them, visually and verbally. Value is built in the details.

Change the way you share the price.
Don’t sell by offering a range of pricing, or by stating, “Our prices start at $$$”.
The client automatically will latch on to the lowest price and will expect to negotiate down from that point. Rather, determine which floor plan best meets the clients needs and work price offerings from there.

Cheap is not the only thing.
Although the “price buyer” declares it is all about who has the lowest price – that is probably not his only motivation.
If it were, he probably wouldn’t be in your neighborhood looking for apartments. He would be at the cheapest place in the entire metro area. You can always find cheaper if cheap is what you’re really looking for. The client that is price point sensitive is just looking for the best value. Show them why you are just that, and don’t be afraid to lose the client, if it really is about nothing but price.

Retrain salespeople.
What worked effectively last year, likely won’t work today. Provide support and solutions to your sales team and be as flexible as possible with pricing and policy guidelines. Listen to their views, and ask them for solutions. You may be surprised how little they may need to start moving product.