The Demand Solutions Blog

7 Ways to Tell if Your Revenue Manager is Skinny Dipping

Posted by Donald Davidoff on Jul 24, 2019 8:36:00 AM

One of the challenges with pricing and revenue management (PRM) being more than 18 years old is that most of the pioneers in designing and developing the software are no longer involved. In some cases, companies are on their 3rd or even 4th generation of associate (this holds for both software vendors’ and operators’ teams).

The result is that we often no longer have a healthy skepticism that drives deep knowledge of both the software’s capability and the ways various parts of the demand management ecosystem (all the policies, procedures and other activities that affect demand) affect how we should use the software.

After a decade of growth in the multifamily sector - when it's been relatively easy to deliver upside - senior operators might ask how much of their growth comes from proficiency in PRM, and how much from riding the market.  As Warren Buffett famously said, “Only when the tide goes out do you discover who's been swimming naked.”

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Topics: Pricing, Revenue Management, Demand Management

3 Reasons Multifamily Pricing Needs an Ownership Mentality

Posted by Donald Davidoff on Jul 16, 2019 1:30:33 PM

It’s been more than 18 years since the first property went live on the first automated pricing and revenue management (PRM) system in multifamily housing. What started as a niche product and function (only about a half dozen companies were using PRM software in early 2006 (six years into the “PRM revolution”) is now embraced by owner/operators and fee managers alike. Virtually all of the NMHC top 50 use automated solutions, and we estimate close to 50% of all professionally managed multifamily housing companies use a revenue management system.

In my time watching PRM mature from an early start-up stage to widespread acceptance, I’ve seen many models of PRM support evolve. Broadly, I put them into two camps: those whose pricing managers behave as if they own the communities and those who serve in a more subordinate role to owners or operators.

In the case of the former, PRM and property management are co-equals and collaborate as such in executing a strategy. Of course, being co-equal has its challenges, the most obvious of which is coming to a decision when both parties authentically disagree; if they’re co-equal, then who casts the metaphorical deciding vote?

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Topics: Pricing, property management, pricing and revenue management

Multifamily Pricing: The Danger of “Doing Fine”

Posted by Dom Beveridge on Jun 25, 2019 3:57:01 PM

A couple of weeks ago, we published a post about the risk to multifamily operators of complacency in their approach to pricing and revenue management (PRM).  Frequent readers of this blog will be familiar with this theme, which was a major finding of our 20 for '20 white paper.  To summarize, PRM seems to have slipped from the senior management agenda, resulting in a pervasive view that "PRM is doing fine."

PRM has been doing fine in multifamily for a number of years - in fact, it's been doing exceptionally well, delivering outsized returns for operators and investors alike.  Looking forward, however, our concern is not so much with the current business practice, but its future evolution. With reduced senior management attention and technical innovation delegated to a highly consolidated vendor community, several of the drivers for big change appear to be missing.  To put it another way, the source of the next big thing in PRM is far from clear.

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Topics: Pricing, Revenue Management, pricing and revenue management

NAA Apartmentalize:  3 Killer Pricing and Marketing Tactics

Posted by Trachelle Spencer on Jun 18, 2019 12:02:00 PM

It's June, the sun is out (mostly) here in Denver, and like all locals involved in the multifamily industry, I'm looking forward to welcoming a few thousand esteemed colleagues to my hometown for next week's NAA Apartmentalize conference.

This year I'm excited not only because the show is in Colorado, but because I'm taking part in what promises to be an excellent panel, discussing one of my favorite topics: the interplay of pricing, lead generation and sales.  I will be joined for this discussion (which takes place at 5 pm on Thursday, June 27) by my friends John Reardon of Beacon Communities and David Dear of Equity Residential.

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Topics: Pricing, NAA Conference

5 Highlights of Donald Davidoff’s Multifamily Matters Interview

Posted by Donald Davidoff on Jul 9, 2018 2:00:00 PM

You probably already know that D2’s CEO, Donald Davidoff, revolutionized the multi-housing industry seventeen years ago when he led the team that built the first automated pricing and revenue system.  But he certainly wasn’t content to rest on his laurels. Donald, an engineer by training, has continued to transform the industry with a holistic viewpoint tied together by a common thread: data.

Multifamily Matters, a national weekly radio show dedicated to interviewing the best in the industry, was eager to have Donald on as a guest so he could share his unique perspective. After all, as host Paul Marks pointed out, not only was Donald prescient about the multifamily industry’s need for analytics, he has continued to be a “legendary thought leader” for Pricing and Revenue Management (PRM).

Here are some highlights from Donald’s hour-long interview, followed by a link to the full conversation with Paul Marks and Donald’s former client, Brian Hilton. Hilton is the current head of PRM at Simpson Housing, which was the second multifamily operator in the industry to implement PRM software. 

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Topics: Pricing, pricing and revenue management, Artificial Intelligence

6 Indicators that it's Time for a Pricing Health Checkup

Posted by Jessica Mills on Sep 26, 2017 3:00:00 PM

Modern pricing strategies and revenue management systems have had a tremendous impact on the performance of multifamily owners and operators. While systems like LRO and Yieldstar are quite robust and continuously improved, they are not infallible on their own. In fact, the flexibility they give operators to implement a range of strategies means that users need to review and modify settings as market conditions and strategies change.

Forward-thinking and high-performing property management companies realize that, as with any system, a routine assessment or checkup is a powerful tool. Inevitably when you look at your pricing and revenue management system in depth, you find areas of meaningful improvement.

Here are six indicators that the time has come for a pricing health checkup:

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Topics: Pricing

Lessons Learned: Conducting a Pricing Review

Posted by Jessica Mills on Jul 21, 2017 3:00:00 PM

Weekly or bi-weekly pricing review calls are a great forum to learn more information on why a property is or isn’t leasing. But sometimes when helping teams the answer isn’t as simple as just “the price”. You may be surprised what may arise as part of these regular communications. Here are three lessons learned from leading these pricing review calls: 

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Topics: Pricing

3 Qualities Successful PRMs Share

Posted by Jessica Mills on Jun 23, 2017 12:00:00 AM

A revenue management system is a large company investment. We expect site teams to comply with this pricing and train them on what information they should be entering in our systems. However, you may hear that teams aren’t showing up to pricing calls or have failed to mention the road construction deterring prospects from visiting their property. If this sounds familiar, you do have a problem. But it may not be your sales team...have you hired the right person as your Pricing and Revenue Manager?

The most successful PRMs share certain qualities that give them the ability to effectively run revenue management systems, but also manage the relationships involved. Here are the top three qualities that ideal PRMs share:

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Topics: Pricing, Revenue Management, pricing and revenue management

3 Pricing Must-Haves for Softening Markets

Posted by Jessica Mills on Apr 13, 2017 2:00:00 PM

When is the best time to think about how to price your assets in a softening market? Before the market softens. Having a strategy in place before things go south is crucial so no one is tempted to make emotion-driven decisions when the heat is on. What you do in a soft market sets the bar for what you will do in a larger downturn. If drastic decreases or discounts show up at the first sign of nervousness, what will we do when we really are in a position of negative growth?

Here’s 3 big tips for pricing in a soft market:

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Topics: Pricing, pricing and revenue management

Dollar vs. Percentage Discounts, Which to Use With Multifamily?

Posted by Donald Davidoff on Jan 4, 2016 11:00:00 AM

The Harvard Business Review’s daily stat email recently sent an interesting statistic related to pricing psychology. Specifically, they reported:

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Topics: Pricing