Welcome back to Exit & Equity — the email for serious self-storage owners.

Today we’re breaking down one of the most misunderstood parts of the business: promotions. Everyone loves “first month free,” but few have run the math.

Let’s go.

Everyone’s offering “first month free.” Most of them are losing money. In self-storage, promotions have become as common as padlocks – and that’s a problem. Take it from an operator who’s crunched the numbers: blindly copying the REITs’ teaser deals can quietly bleed your facility’s profits.

Sure, free rent fills units fast. But what if those “free” months often cost more than they’re worth? Promotions aren’t a no-brainer win. They’re a calculated gamble, one you need to fully understand.

This week, we will challenge the conventional wisdom around move-in specials, lay out the math with real numbers, and help you decide when a promotion makes sense… and when it’s a slow march to the auction block.

Promotions aren’t really “free” – you’re footing the bill. The obvious cost is the rent you give up, but that’s just the start. You still incur operational expenses for that tenant’s free month: processing paperwork, onboarding, cleaning the unit after move-out, utilities, security, and more. Those costs don’t vanish just because you waived the rent.

For example, let’s say your 10×10 unit rents for $150/month. A “first month free” promo means you immediately forgo $150 in revenue. But you might also spend another $20 in admin time and supplies. That’s about $170 out of pocket to acquire this customer. If that tenant stays one month and leaves, you lost money, you essentially paid them to use your facility. Even if they stay longer, you need to calculate the payback period: how many paid months until the promo cost is recovered? In this case, by the end of month two the tenant has just covered your free month cost. Only from month three onward do you start seeing real profit.

Many promo-seekers leave early. Studies show discount-motivated renters are far more likely to leave after the free period, hopping to the next facility down the road. So you might be giving up a month’s rent only to get a few months of low-margin revenue. Always compute the true cost. That “free” month might be your most expensive once you tally lost rent and operating spend.

Customer lifetime value (LTV) (A metric we’ve discussed in previous newsletters) is the total revenue you earn from a tenant over their stay. The average rental duration in self-storage is around 14 months. If your average unit rents for $120 a month, a typical customer might generate about $1,680 in revenue.

Now factor in a first-month-free promo: you’d collect only 13 out of those 14 months, bringing LTV down to $1,560 – about a 7% revenue hit per customer. Not terrible if they stay that long. But promo customers often don’t. If your deal attracts someone who leaves after three or four months, your LTV collapses. Instead of $1,680, you might earn just $360 – and you gave up $120 of it in a free month. That’s a disastrous payback ratio.

Always plug in your facility’s numbers: average stay, rent, and promo terms. See how long it takes to recoup that free month. You may find you need a tenant to stay a year or more just to break even. Promotions can work, but only if you understand exactly when they do.

Not every empty unit is a sign to give freebies. Smart operators know there’s an occupancy threshold where promotions make sense – and above which they don’t. Many revenue managers draw the line around 85–90% occupancy.

Below ~85%, a few targeted specials can attract price-sensitive customers and boost fill-up. Once you’re over 90% full, giving away rent is usually unnecessary (and costly). Why offer “50% off” if that size is almost full? You’re likely to rent it at regular rate anyway.

Some operators automatically trigger promotions for lagging unit types and raise rates on units above 85% occupied. It’s about balance. Think of 85% as the pivot point: below that, a discount can generate incremental occupancy; above that, you’re mostly just cannibalizing revenue from people who would have rented regardless.

REITs like Public Storage and Extra Space dial promotions up and down seasonally – heavy in winter or slow markets, minimal in summer or high-demand zones. Independents should do the same. Use promotions like a faucet: turn them on when occupancy dips, and taper off when you’re comfortably full.

Promotions have side effects that don’t show up in your spreadsheet. One is tenant quality. “Deal-hunters” are often less sticky and more likely to default or abandon junk. I’ve seen people use a free month just to dump unwanted stuff and vanish once rent kicks in.

Another hidden cost is pricing power. Rely too heavily on “$0 move-in!” and you train your market to expect a discount. Some REITs advertise high in-store rates, then deep online promos, only to raise rents a few months later. That bait-and-switch creates mistrust. Constant discounts can also brand your facility as the “cheap place,” making future rate increases harder.

And don’t forget valuation. Every dollar of free rent is a dollar off your NOI, which directly impacts facility value. Heavy discounting may inflate occupancy but depresses long-term financials. Finally, existing tenants notice. If they see “first month free” banners while paying full rate, they might ask for deals too. Soft costs – churn, cleanup, reputation – add up.

In short: every promotion has a shadow price. Always weigh that hidden cost before pulling the trigger.

“First month free” isn’t your only move. Independents often win by doing what the REITs can’t. For instance, U-Haul offers a free lock instead of free rent. A $10 lock provides real value without giving up $150 in revenue. I’ve run promotions like “Free move-in kit” or “Free use of our truck.” These deliver value while preserving your price integrity.

You can also use partial discounts instead of full freebies: 50% off two months, or 25% off four months. The math is similar, but the perception is gentler. Target your deals – maybe only for large units sitting empty – or waive smaller one-time fees like admin charges. Referral credits (e.g. $50 for sending a friend) cost less and reward loyalty.

If you do offer a free month, attach conditions: a minimum two-month stay or rebate it on the third invoice. This filters out the hit-and-run renters.

Finally, get creative: partner with movers or insurance providers, or emphasize your “No Gimmick Pricing” as a brand advantage. Promotions should fit your strategy, not define it.

Are promotions inherently bad? No – they have a time and place. If you’re opening a new facility at 0% occupancy, aggressive specials make sense. If it’s winter and you’re at 70%, a promotion can stimulate move-ins. And when a REIT down the street is plastered with “1st Month Free” signs, you might need to respond.

The trick is to use promotions as a scalpel, not a hammer. The best operators I know treat concessions surgically: precise, limited, and data-driven. They set clear rules – like “only discount units vacant 60+ days” – and monitor performance closely. If a promo doesn’t attract long-term tenants, they shut it off.

As an independent, you have agility. You’re not tied to a corporate playbook. If a promotion isn’t working, pivot today. Ask yourself: would I rather have 85% occupancy at full rate, or 95% at a deep discount? There’s no universal answer, but it should always be intentional.

My own approach: fewer blanket specials, more targeted offers. When we do run promos, we’ve run the numbers and know our breakeven. That’s the key — control the promotion, don’t let it control you. The goal isn’t just occupancy; it’s profitable occupancy.

As one mentor told me: “You can rent any unit if you make it free — but we’re not in the business of giving away storage.” Use that as your guiding principle.

You don’t need a PhD in finance to quantify a self-storage promotion – a simple spreadsheet will do. Here’s a quick step-by-step to create a Promotion ROI Calculator that lets you sanity-check any deal before you offer it:

With this simple calculator, you’re essentially doing a mini pro-forma for your promotion. It brings discipline to the decision. Instead of guessing, you’ll know “I need X occupancy lift from this special for it to make financial sense.” If your best guess doesn’t hit that X, you either tweak the promo or skip it. Over time, feed in your actual data (e.g. how many promo tenants you retained and for how long) to refine your model. Running promotions without tracking is like sailing without a compass. This DIY tool ensures you always have an eye on the true north: profitability.

Reply to this email and let me know if this sheet is working for you. If you need help building it - grab some time with me!

The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane.

— Marcus Aurelius