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Senior Living Sales: Creative Pricing Strategies for 2017

Senior Living Sales: Creative Pricing Strategies for 2017

Well, it’s budget time once again. Time to reevaluate pricing, analyze trends, and build 2017 business plans, tactics, and strategies. Setting rates usually starts with an analysis of occupancy and vacancy by unit type; calculating rent, care, and community fee averages; evaluating current resident rates; and comparing competitor pricing.

Here are some creative senior living sales strategies to think about for 2017:

Value/ Premium Pricing

This strategy allows a pricing spread throughout the community, offering greater pricing elasticity to meet a wider range of financial options for prospects without eroding rate.

Select an equal number of…

  • Value Apartments with undesirable locations (end of long hallways, upper floors); undesirable views (parking lot, dumpster, mechanical units); or with a lack of amenities (dark, small, limited closet space)
  • Premium Apartments with a premium location (near elevator, on the first floor, near dining room, etc.); premium view; or with premium amenities (upgrades, closet space, square footage)

Set Value and Premium Rates

  • Price the Value Apartments a dollar amount lower than the average rate per unit.
  • Price the Premium Apartments a matching dollar amount higher than the average rate per unit.
  • This creates three price points for each apartment type and leaves the overall rate unchanged.

Value/Premium Pricing is Most Effective With…

This strategy works well in communities with 10 or fewer vacant apartments with undesirable views, locations, or amenities that are not selling. This short-term pricing strategy does not erode rate as the additional rate gained in Premium units offsets the discounts offered in the Value apartments.

Variable Pricing

Much like paying points on a mortgage, the greater the upfront move-in fee, the lower the monthly base rent.

For example, for every $2000 more paid up front, the resident base rent is reduced by $200.

Variable pricing benefits:

  • This gives the community good cash flow up front
  • The advantage for the resident is that the investment is paid back within 10 months and all future increases are based on the lower rate.

This strategy provides solutions for prospects who:

  • Have good liquidity from the sale of their home or from strong investments, but they do not have much income. (They can put up a large move-in fee and buy down their monthly price that is within their income range.)
  • Have a strong income but do not have upfront cash (waiting to sell their home, money tied up in annuities, CDs, or other investments).

Variable Pricing is Most Effective With…

Rental CCRC/ IL where the length of stay is longest. It competes well against the buy-in model, as it offers control of the rate to the resident without requiring a large buy-in fee. It pays back the investment in the present where the buy-in model only pays back at the end of the stay.

It also works well in economically fragile markets where people need more options in order to create a financial solution. It also works well in more sophisticated metro markets where the buyer wants to be in control and is always looking for a deal.

Volume Pricing

This short-term strategy establishes a “can’t walk away from” price to move a volume of apartments quickly. Establish a defined time frame or a number of apartments offered to limit rate erosion. This approach trades rate for occupancy until the community reaches an occupancy percentage to turn the rate lever back on.

The best strategy is to identify a specific type of unit, such as studios, or a specific location, such as upper floor location that have been vacant for a long time.

Most Effective With…

Works well with communities under 80% occupied where the cost of vacancy outweighs the erosion of rate. This strategy also works with communities who are convinced that their only barrier is rate. Using volume pricing for 60 – 90 days will confirm or dispel the rate barrier theory. If no one buys at the volume rate, it’s not a pricing issue, so keep digging.

Check out other sales and occupancy growth resources in our Senior Living Marketplace »

“I’m Not Ready Yet” – Have You Heard This from Prospects?

“I’m Not Ready Yet” – Have You Heard This from Prospects?

If you have spent anytime as a sales counselor in Senior Housing you most likely hear this on a daily basis. Does that mean they REALLY are not ready yet? The answer is no. What they really are saying is, “I don’t trust you yet” and I am afraid of making this life change. They are thinking, you haven’t given me any indication that you have actually “heard me”, understand my fears of making this change, and “recognized me” for all I have done in my life.

Building trust with a potential resident is probably the most important thing you can do before you start talking about benefits of your community. I know you are probably saying to yourself, I ask about their needs? Do you simply ask about the health and social needs? Of course that is perfect for the most “urgent” prospect that has already made the decision to move. What about the 90% of your other prospects that are onl considering moving in?

Have you ever asked questions like?

  • What are you most proud of in your life?
  • Tell me about your family, children, Grand Children?
  • What was occupation?
  • Have you traveled? If so what is your favorite place?
  • Where and how did you meet your spouse?

These type of questions say to your prospect? I care about you and not just about “selling you”. Let’s face it. Seniors are smart and they know when they are being sold. Stop Selling to Start Closing.

Guest Blog by Jayne Sallerson, COO of Sherpa.

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