By Bill Biko
Have you ever shopped at Walmart? I think I know the answer, but humour me and just admit to it as it appears 99% of the North American population has shopped there.
There are many reasons people shop there and there are many reasons people keep coming back, but today we are going to focus specifically on their pricing, which is why the majority of people shop there. Sure, they typically have great prices, but there’s more to it than just great prices, it’s how they are priced.
Everywhere you look, items are marked at $19.97, $39.99, $89.97 or even $99.99. They are never priced at $20, $40, $90 or $100 and there is a lesson from this. A lesson that many successful landlords have learned along the way either by accident, or by watching successful companies like Walmart.
It’s also a lesson you will learn by the end of this article and be able to apply to your rental property for your very next vacancy. It’s all about price points.
So what is your rental property currently renting for? Is it $600 per month? $1,000 per month? How about $1,500 per month? If it’s any even number, you just have to make one tiny adjustment and you will immediately see a difference with your next ad. Simply lower the price by $1, $3 or even $5.
Psychologically people think of $599, $997 and $1,495 as lower numbers than $600, $1,000 or even $1,500. It’s a subtle difference, but this slight change causes rational thought to jump out of the window. Potential tenants feel that the price is less, even if the difference is just a few pennies or just five dollars.
This can be extremely powerful when you are trying to rent out a property, so humour me and next time you need to fill rent your vacant rental property, drop a few dollars off the price.
To make this even more effective, here’s another tip to really make your pricing attract more potential tenants and to help ensure your properties get found more often. If you advertise on any of the online rental sites (and I highly recommend you start if you aren’t already doing this) make sure you understand their search functions on the site.
Often the systems allow renters to search by price and you always want to be just under any cut off points. If they break the increments down by $50 it might be tougher to stand out, but if they break them into larger increments, you can make sure your rental fits in the right spot!
If the cut off points are $750, $1,000, $1,250 and they increase by $250 increments, you want to fit just under those cut off points. By using price points of $749, $999 and even $1,249, you fall into the search results people are locked into.
Also, don’t be afraid to experiment and even try $747, 997 and $1,247 as pricing experiments have shown the number 7 included in a price actually sells better than 9! Of course, common sense dictates you shouldn’t under or over price yourself to fit into these allotments, so make sure you have a thorough understanding of what the equivalent properties rent for in your neck of the woods.
Being a landlord is more than just owning a rental property. Understanding simple tactics like this can help make your landlord business more successful and less stressful. So don’t be afraid to keep learning.
Having dealt with hundreds of tenants and dozens of properties in the last decade Bill has definitely become an Educated Landlord. For tips, articles and advice for to help you be a better landlord visit http://www.TheEducatedLandlord.com.
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Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.