Are you ready for some “extra” revenue? Offering products and services at your self-storage facility that go beyond unit rentals attracts customers and enhances their experience. It can even protect your business from market volatility! Learn more about the benefits, the most common options be offered today, plus how strategic planning and effective marketing can turn these add-ons into profitable ventures.
While unit rentals are a self-storage facility’s main source of income, there are many other ways to generate revenue. Ancillary products and services (aka add-on profit centers) can bring in more customers, lend an edge over competitors and create inroads to the community, as many can be sold to the general public as well as tenants.
What’s more, the revenue generated by a successful “extra” can help protect against market volatility while providing convenience and amenities that add value for your customers and boost their satisfaction. There are many options available, but not all of them will be the right fit for every facility. Strategic planning and careful consideration of factors such as location, market and property design are essential to success.
Ancillary Options
For years, the self-storage industry has relied on a number of stalwart add-ons to boost revenue. These include the following, though many operators are now expanding their catalog to include other creative options.
Retail. Selling items like boxes, tape, bubble wrap, locks and others that help tenants with their transition into storage requires a relatively small upfront expense for the inventory, signage and displays, with costs recouped quickly through adequate mark-ups. Becoming a supplier of these moving and packing supplies is mutually beneficial for both operator and customer, says Grace Houser, communications specialist for Extra Space Storage Inc., which operates more than 4,000 facilities nationwide.
Tenant insurance/protection plans. David Hurless, director of operations for Stor-It Self Storage, which operates 11 California facilities, considers tenant insurance to be the “hottest” add-on in self-storage. “There is really no downside, and it has proven to be a very lucrative profit center,” he explains.
Depending on the size of your portfolio and your sign-up rate, you can keep 30% to 50% of the monthly premiums, Hurless says. A facility with 2,500 units, half of which are insured at $11 per month, earns a commission of 40%. “That breaks down to an extra $5,500 per month, a $66,000 increase in annual revenue with no investment,” he notes.
Unlike many other ancillary offerings that require upfront investment, tenant insurance and tenant-protection programs become profitable as soon as they’re implemented. However, they often depend on well-trained staff who can effectively and consistently present renters with the option.
Boat/RV storage. Extra land can be turned into simple vehicle parking without much effort and relatively low capital. Roughly $10,000 should cover materials, time and signage to create 10 to 15 rentable spaces, says Thomas Bretz, CEO for Elmdale Partners, which operates the StorSafe Self Storage brand. Rental rates vary based on location and many other factors but can reach more than $400 per month.
To generate still more revenue, consider upscaling units from outdoor to carport parking or even enclosed spaces. You can also offer amenities like electrical hookups, dump stations and wash bays. Some operators also provide concierge service and specialty retail items specific to these renters.
Just be aware that boat/RV storage isn’t allowed in all areas. You’ll need to ensure your land is properly zoned. A more robust insurance policy and security system will also be necessary to protect your business.
Security upgrades. There’s strong revenue potential in security-focused offerings, according to Randall Mosca Jr., chief brand officer for Columbia Management Group, which operates 28 Columbia Self-Storage locations in Arizona, New Jersey, New York and Pennsylvania. “Many tenants want a hands-on, connected feel to their unit, making smart locks, alarms and enhanced security features attractive premium upgrades.”
Columbia has rolled out smart-unit technology at eight of its facilities. Mosca estimates the cost to install it was roughly $1,500, and the company charges each tenant about $15 more per month. However, adding electricity and Wi-Fi to support smart technology can add expense. “Technology-driven add-ons can be more costly depending on the infrastructure, wiring or facility-level upgrades required; but when implemented in the right market, they can support premium pricing and long-term returns,” Mosca says.
Truck rentals. When it comes to this profit centers, you can purchase or lease your own vehicle, or you can become a dealer for a truck-rental company. Both models have their pros and cons.
If you own your truck, you can charge a nominal fee to new renters or offer free use as a move-in perk. You can also levy fees for mileage, fuel, late returns, cleaning, and even the use of additional equipment such as hand dollies and moving blankets. Plus, you can lend the vehicle to local charities, churches or schools to garner community goodwill. Your truck is also a moving billboard for your business, spreading info about your site everywhere it roams or parks.
On the flip slide, all maintenance and insurance requirements fall on you. If the vehicle breaks down while in possession of a customer, you’ll need a plan.
If you become a dealer for a third-party truck-rental company, your business earns a commission. Though your vendor partner will cover insurance, marketing and vehicle maintenance, you’ll need staff to handle rentals and customer service. How much will depend on how many vehicles you offer and your location. Some facility managers can handle these transactions in addition to overseeing their site. Others might hire a full- or part-time employee to run this ancillary service.
Wine storage. This specialty offering can bring in a variety of clientele. Tenants might include personal collectors, wine clubs, bars and restaurants, and even wholesalers who need extra space for backstock.
A dedicated wine-storage area requires thoughtful planning and design, security, and marketing. A “white glove” approach to customer service is also essential. Here are some pointers:
Records storage. Even in today’s digital environment, record-keeping is essential for many businesses. Offering this service can help commercial clients free up space and stay organized.
The storage area should be climate-controlled to ensure documents are well-protected. Shelving can be a customer perk or added for a fee. Extra security is necessary to ensure restricted access. Additional services such as document shredding or digital scanning can enhance convenience and attract long-term customers while generating even more revenue.
Cell-tower leases. If you have a large property, leasing land to a telecom company for tower installation can create a steady, long-term revenue stream. Just be careful about the lease. It’s imperative to negotiate favorable terms, including rent escalations and maintenance responsibilities. Proper legal and zoning compliance is also essential, making this a valuable but carefully managed investment. It’s wise to engage an attorney to lobby on your behalf.
Pack-and-ship services. This can benefit your self-storage tenants but also the general community. You’ll need a dedicated workspace and a steady inventory of packing supplies. You’ll also have to secure partnerships with major shipping carriers. Your staff will need to learn proper packing techniques and the shipping processes for each carrier. There could also be upfront costs for equipment, a point-of-sale system for transactions and signage.
Critical Factors for Success
There are several factors you need to consider when deciding whether to start a new self-storage profit center:
Location. Your location can provide valuable insight to the products and services that may sell well. For instance, some of Mosca’s facilities are near farmland or in areas with high demand for landscaping, making extended access hours a popular add-on for commercial tenants who need to secure equipment from their unit very early in the day. Similarly, boat/RV storage is more viable at a properties near highways or popular recreational areas, Hurless adds.
Site design. It’s also important to assess whether your self-storage property has the amount of space required for the service or product you’d like to offer. Truck rentals need outdoor storage space for vehicles, which may not be available at multi-story facilities on small land parcels. Retail sales require room for inventory and displays.
Infrastructure is also important. For example, some facilities are designed without fences or gates. This may make them unsuitable for boat/RV storage, which generally requires higher levels of security.
Customer base. Think about your potential renters, including their age, home size and average income. High-end offerings like wine storage tend to perform better in more affluent areas. Tenants in lower-income markets may be less apt to spring for certain products and services, such as tenant insurance, Mosca says.
Business model. Self-storage properties that are remotely managed or largely automated may not be able to offer some of the most common profit centers such as retail sales and truck rentals, which rely heavily on in-person staff.
“The hardest ancillary line to really dig into is the supplies — selling boxes, tape, etc. — without a human being there,” Bretz says. Some operators have experimented with vending machines for items like locks, tape and markers; but boxes obviously aren’t a fit.
Still, other add-ons work well with an unmanned self-storage operation, such as boat/RV storage and goods coverage, both of which can be sold online at the time of rental. In fact, Hurless notes, it can be easier to share information about these offerings online where it’s fully and clearly displayed vs. hoping the property manager remembers to bring it up.
Launching and Marketing
The amount of time it takes to get a new profit center up and running at your self-storage operation will depend on many factors. Some offerings can be implemented very quickly, while others have a long runway. Boat/RV storage, for example, requires time and planning to design, permit and build. Adding retail sales can be quicker if your space is ready and you have the funds to purchase inventory.
It’s best to develop a detailed business plan that outlines timeline, pricing, operational costs and revenue projections as well as operational logistics such as staffing, technology integration and other expenses. It should include a market analysis to identify your target customers and potential demand, and contingency plans for potential risks.
Once your ancillary is ready to go, you’ll need to get the word out to customers and the general public. Consider a multi-channel approach. Start by posting to your social media platforms and sending an email to existing tenants. Mosca suggests educating prospects using onsite signage, staff conversations and digital channels — namely, a well-designed website. “A functional, professional website is essential to explain the offering, support online sales and create a seamless customer experience,” he says.
But don’t stop there! Consider online advertising such as pay-per-click and look for local partners who can help you cross-promote. For example, if you’re adding boat/RV storage, stop by a local dealership and offer them a referral reward. This can also work for wine clubs.
Finally, make a big splash when launching your profit center through pricing promotions. A small discount or gift card for referrals can create buzz. Highlight your add-on’s unique features like security, accessibility and convenience to differentiate your services.
Training for Success
Self-storage facility employees play a pivotal role in the adoption of any ancillary offering, making it essential for them to be properly trained. They need to understand and be able to communicate the value of these products services and products to customers. If they aren’t selling it or signing it up properly, the product or service won’t succeed, Hurless says.
Mosca suggests providing managers with clear talking points. Showing value to the tenant helps build confidence in their purchase. “Staff plays a key role in the success of ancillary offerings by how clearly and consistently they present them as solutions, not sales,” he says.
After training, have a plan to ensure the sales strategies are maintained and the team is held accountable. Hurless suggests incentivizing employees by hosting competitions and offering rewards for reaching milestones.
When to Pivot
When an add-on offering is creating operational strain for your self-storage business, or it negatively impacts the customer experience, it may be time to pivot. According to Mosca, it’s essential to assess whether it fits the way the facility is used and operated. “Core storage operations should always remain the primary focus, with ancillary offerings positioned as secondary enhancements that complement the business,” he explains.
“Not every ancillary works for every location, and increased traffic or staffing burden can outweigh the revenue. Operators should be willing to adjust, limit or remove offerings that create more challenges than value,” Mosca adds.
Rachel French is a freelance content writer and copywriter. Her background is in business-to-business media and copywriting for web applications. She’s covered a range of industries and markets including self-storage as well as financial, food and beverage, healthcare, and nutraceuticals. She previously worked for Inside Self-Storage as an intern turned associate editor.
Read more on Inside Self-Storage
