Maintaining fair unit prices while still attracting leads proves quite the balancing act in the senior housing industry. Slashing rents to draw in occupants could mean a revenue hit, but keeping them too high or under wraps might make prospects hesitant to move forward with the process.
A survey of recent tour-goers conducted by third-party senior living referral company Caring.com found that consumers want more open pricing information when they connect with a senior housing community. Of those who responded, 15% complained specifically about how the finance discussion was handled during the tour itself. Some even criticized the availability of pricing information ahead of the visit.
“If they don’t tell, I think that sends the sign that there’s something to hide,” Traci Bild, CEO of Bild & Company, a consulting firm that aims to help senior housing and health care organizations build occupancy and maximize revenue, tells SHN. “My belief is that no matter how you’re pricing your units, for what we’re providing, it all has to come back to value.”
But there are pricing methods—some seemingly obvious, others new in the seniors housing game—that providers can employ to optimize revenue, convert more leads into move-ins and reduce the need for promotions and discounts.
If the Caring.com survey is any indication, being transparent with pricing is key, and a simple solution at that, says Katie Roper, the company’s vice president of sales. Even if facilities don’t reveal exact price points with prospects right off the bat, Roper suggests at least sharing start-at rates with referral agents such as Caring.com, a move that she says has tripled the number of leads that Caring.com has been able to provide its senior living partners.
Being too transparent up front, however, can lead to lost prospects, Bild says. High figures can scare people away before they’re even aware of what that price entails, so getting them on site for a tour is crucial. Complete transparency, she says, should follow the discovery process.
And should a potential move-in ask about pricing ahead of the visit, Bild recommends providing a range while continuing to emphasize their options.
A relatively new approach in the senior living sector, dynamic pricing is a strategy that sets flexible prices for products or services based on current market demand. Most commonly known for its use in the airline industry, dynamic pricing is gaining traction in senior housing.
Take Holiday Retirement, for example, which recently implemented a propriety system to recalculate its rates on a weekly basis. The program, called Prorize, optimizes rent in the senior living space using an algorithm to set rates based on factors like floor plans, seasonality, demand and supply, marketing and more.
“That doesn’t mean they do change, necessarily,” says Prorize President Ahmet Kuyumcu. “There has to be a reason to support your change. We don’t just constantly change it.”
Bild touts dynamic pricing as an innovative strategy that creates a sense of urgency, as sales people can tell prospects that pricing is subject to change. Still, it is yet to be determined whether fluctuating prices based on supply and demand can be sustained in the industry, she says.
“If it works, now we have another model that’s great for investors and great for the properties,” Bild says.
The premium pricing model focuses on specific unit features that make a space more or less desirable, with rents adjusted on a case-by-case basis.
This strategy provides families with more options without devaluing the units, Bild says, and proves to prospects that senior housing is not one-size-fits-all. From a sales perspective, she says premium pricing makes it easy to indicate exactly why a unit is priced as it is.
If a room is located near an elevator, for example, it might be priced lower than one situated farther away. Upgrades and layouts also factor into the different price points.
“Lots of clients use it successfully, but not enough,” Bild says.
These are three potentially effective strategies, but whichever a senior housing provider goes with, Bild says to make sure that salespeople and trained and comfortable speaking to prospects about how pricing works.
Written by Kourtney Liepelt