Why Hiding Your Prices from Potential Renters is an Ineffective Strategy
At LWS, we're noticing one old-school technique continue to rear its head here in Canada:
Rental housing providers hiding their prices.
Over the last decade, most rental housing providers have begun to advertise their rental rates. However, our research shows that at least 25% of professional management companies still hide their rates from prospective renters.
We hear two common reasons for this strategy:
"It allows us to gauge the interest level of the prospect and then set the price accordingly."
Or, more commonly:
"We don't get calls when we post the price." This is also known as the "It forces people to call" strategy.
Withholding pricing information is counter-intuitive to almost every emerging rental industry trend:
- Renters are expecting important information immediately
- Integrating listings with company ERPs and management software is more common
- Online applications, leasing and payment are becoming more and more popular
All of these rely on having a transparent pricing strategy.
That being said, here are the main reasons not to hide your prices from researching renters.
Holding Out to Optimize Prices? The Pros Don't Outweigh the Cons
Many of the most-visited apartment listing sites in the country (Zumper.com, Padmapper.com, Rentals.ca, RentCompass.com) do not allow listings unless they include pricing information. These sites drive over 3 million visitors per month in rental traffic. Forfeiting the ability to list on these sites is simply not worth the benefit of withholding your prices.
While RentBoard.ca allows listings without pricing, they discourage the practice, and have mentioned it is the #1 source of user complaints.
Brent Daviduck, owner of Rentboard.ca, sums up the issue:
"We have data that shows that listings without a price get fewer views on average. If your listing does not include a price, your listing will never show up if the user enters a low-high price range (and most do).
For example: If the renter enters a price range of $1000 to $1200 and your listing price is zero, your listing will not even show up in the search results. When renters set up alerts to be notified of new listings – only those listings with an explicit price will be sent to renters – listings without a price are not even considered because we know renters prefer to see price information in listings."
By withholding your rates to squeeze more rent out of individual prospects, you're doing the exact opposite: leaving money on the table.
Anecdotally, it is common to see an increase in phone calls and emails for companies who are new to posting their rates online. Management companies are often shocked by the response after they post their pricing on sites like Zumper or Padmapper. They don't realize their units are below market rent, since they weren't properly exposed to the largest online rental audience.
The owner of Megacity Management recalls that moment for him:
"I've come to realize that RentSync is a barometer to assist us in setting our rental rate in the marketplace. If we set the rents too low we get too many calls and emails - it's unmanageable. If we set them too high, we generate a weaker response. When we set the first ads up on the top listing sites we spent 3 days answering emails. Over 150 inquiries came in on the first day.
We learned that we could really raise our rents and that we were leaving money on the table."
More Calls From Ads With No Prices? It's a Self-Fulfilling Prophecy
The old adage, "It's about quality, not quantity" applies here. Leaving your price out in favour of "call for pricing" is likely to generate more calls - but how many of those calls are people just checking the price? This makes unnecessary work for those that have to answer your phones.
A recent survey in Apartmentguide found that the two most important factors for apartment searchers are price and location. If you aren't listing prices, your choice of listing sites is severely limited. Most of the sites that you can use don't have map-based search. Thus, you aren't providing people with the two most important pieces of information: price and location.
If you believe hiding your prices will result in more phone calls, you're right - but those phone calls won't convert at a high rate, and you'll be stuck fruitlessly answering the phone all day. If you do list prices, you can appear on better listing sites, where you'll get more qualified leads since these people will already know the information that's important to them.
This renewed marketing confidence will not only help you fill vacancies, but also allow you to raise your rental rates.