Who Wants to Just Persevere?
If the management orientation has been one of offering a commodity, then it’s a matter of getting prepared to give a rate-level response to new suppliers. To endure as a successful approach, we know that price competition should really be cost competition. So we need to look for areas of cost advantage. I have mentioned in previous columns that the level of marginal unit-operating cost for self-storage operations is quite low, so it’s not possible to cut much there. That leaves financing. While not literally an operating cost, debt service is regarded like one in this kind of situation. Here an existing facility is likely to have an advantage: They may have little or even no debt. That would ease cash-flow pressure and provide room for the rate-level contest. The new facility may not be so fortunate. Its new debt-level obligations could discourage aggressive pricing. So, they may not be too willing to move down as you push to maintain your market position. Without some kind of cost adv
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