Most organizations conduct a regional salary review to determine if staff compensation is competitive in the marketplace. If salaries are too low, superior applicants may not consider employment with your organization. A similar situation exists for pricing of your product; a yearly pricing review may suggest your community needs an adjustment in order continue its appeal. As in the tale of The Three Bears, there is a price that is too high, another that is too low, and one that is just right. Be sure to conduct research to determine a price that remains “in the sweet spot”. The comparable data you consider should include both competitors from the local area as well as your internal competitive product.
Price Too High
A yearly review can prevent you from pricing residences too high, which dis-incentivizes prospects from considering your community beyond learning the cost – prospective residents could be taking a pass on the community without conducting further research into the services provided. Your organization may offer a two-bedroom apartment that is larger than competitors, justifying a higher price. If this is so, be certain that printed materials highlight that distinction by listing square footage, allowing prospects to efficiently analyze and compare pricing. Likewise, if your service package is more expensive than the competition due to its depth and breadth, be sure those additional services are emphasized in promotions.
Price Too Low
On the other hand, extremely low prices may prompt the prospect to assume that your community isn’t worth the investment. To counter this assumption, use plentiful pictures of the grounds and buildings. Disprove unfair assumptions with pictures that paint a thousand words.
If your prices are far lower the general marketplace, you are “leaving money on the table” that could be used toward expansion of your mission.
Price Just Right
So, what is that pricing sweet spot? Residences, services, and levels of care should be considered, as well as contract types and refund structures. If some of the residences within your community have created competition between product lines, factors such as location, new construction versus older homes, sizes, and views can all serve as considerations in determining a price that makes product differentiation both logical and obvious to prospects.
Right-pricing will create value in the mind of the prospect. David C. Alves is quoted as saying, “Seldom do we think about how seldom we think.” The beginning of the year is a good time to intentionally think about what is working and what needs attention. Begin with an assessment of product and price.
Read our Prior Blogs in this Series:
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About the Author
Patty Scotten is a consultant with Retirement DYNAMICS® and serves as their marketing manager. Patty has over twenty five years’ experience in the senior living industry and has led several communities in preselling expansions or increasing occupancy levels. She graduated from Elon University and holds a Masters Degree from University of North Carolina at Chapel Hill. Patty is licensed as both an assisted living and nursing home administrator.