Would you try to build a puzzle with just one piece? You already know the answer is no, so why would you try to make pricing decisions based on just one data point? With puzzles, the picture doesn't start to take shape until you have joined multiple pieces together. The same is true with your pricing decisions.
Too often, we see companies making pricing adjustments solely based on prior rents, often referred to as "trade-outs." When you focus on just one data point (the "trade-out"), you fail to see the full picture. In some cases, users over-ride their pricing and revenue management (PRM) system to protect the trade-out. In this post, I'll explain why that's riskier than you may realize, especially in today’s market.
To be clear, I am not saying that prior rents are not important. They are: I have often referred to them as the "canary in the coal mine," but they don't tell the full story and should not be used exclusively to determine the success of pricing.Read More