Pricing Study and Strategies
Creating Successful Senior Living, Senior Housing or Retirement Community Pricing Strategies
The economy is ever-changing, and senior living communities have to make adjustments. In terms of pricing your community, do any of these situations describe your community and its fee schedule?
- We are considering an expansion and could benefit from advice on how to price our new product without having a negative impact on our existing product.
- We are considering construction of a new retirement community and could benefit from a study of the local housing market and competition, along with pricing recommendations for our new campus.
- We discounted fees during the recession and need a new evaluation of where we fit in the market — the competitive market and the real estate market.
- We completely revamped our fee schedule and need a market adjustment to be sure that we are now paralleling the current housing market while remaining competitive.
- We “froze” or made minimal fee adjustments during the recession and need a study and recommendations for pricing in today’s market.
- We began to offer multiple types of contracts or refund structures and could benefit from some typical pricing strategies for these new options.
Senior Housing Pricing Challenges and the Current Market
The 2008 recession presented challenges for homeowners who wanted to sell their homes and move to a senior living community. This caused occupancy challenges in retirement communities, resulting in many re-evaluating their entrance fees and making adjustments for the marketplace.
Patti Hutton, Senior Marketing Consultant and Principal on Pricing Studies
Currently, however, the economy is on a positive trajectory and the housing market is experiencing a resurgence, with homes selling and many prices restored to their pre-2008 values in many places. In this environment, senior living communities and organizations are investigating expansions or completely new communities (greenfields).
Retirement DYNAMICS® remained busy during the financial downturn and had the opportunity to work with, as well as observe various responses that organizations had to the economic situation, with most implementing price reductions. Using the expertise developed through those experiences, along with formularies recommended by national financial groups, RD can perform a study of your current cost structure to produce pricing recommendations that will be competitive within your geographic area.
New Fees or a Restructure?
RD consultation is valuable when establishing new fees for expansions or greenfields; however, input is also invaluable when considering a restructuring of current fee schedules. The RD consultant will consider many factors but does not look for the easy sales price … just the most effective sales price.
- When RD develops a senior living pricing strategy for a greenfield, the consultant looks at the pricing structure of competitors, the buying power of the potential marketplace, and the construction expenses for the proposed community to make recommendations that are not only competitive, but will serve the community’s financial models.
- When considering an expansion, the consultant will analyze the internal competition and your existing products, along with the external completion, to make recommendations for pricing.
- When considering a re-structuring (lower or higher fees), the consultant will evaluate the internal and external market and make recommendations that are acceptable and sustainable.
The senior housing market has improved and continues to be healthy. Do the fees of your organization parallel the current uptrend in homes sales? Call Retirement DYNAMICS® for a pricing study and analysis today.