Pricing is certainly an influential factor for potential residents who are deciding whether or not they want to sign a lease at a particular apartment community, which is why it's common for many in the multifamily industry to lower pricing when they're experiencing an uptick in vacancies.
However, this key driver of your occupancy shouldn't also be an inhibitor preventing you from maximizing revenue.
To set prices that positively impact your community's bottom line, you need a foundational understanding of the five components that determine rent price.
The five components of rent are:
- Floorplan base rent
- Unit amenities
- Specials
- Lease length
- Unit rent
Let's breakdown what each of these components mean.
Base Rent
Base rent is the uniform price applied to specific floorplans at your apartment community.
For example, if you apply a base rent of $750 for Floorplan 'A' at your community, then every single unit within that floorplan will start at that price. Any time you make a change to your base rent price, you must also change it for every single unit.
Base rent is not the final rent price for those units, however. The final rent price could be higher or lower depending on the other components.
Unit Amenities
Unit amenities can be either positive or negative differentiators for individual units within a specific floorplan type at your community.
Let's look at two imaginary units of Floorplan 'A'—one that's on the first floor of a building (Unit 102), and another that's on the third floor (Unit 303).
Both units have the same base rent of $750. However, Unit 303 has a vaulted ceiling because it's on the top floor, which new residents might be willing to pay more to have as they wouldn't have to deal with the sounds of people walking in the unit above theirs unlike the residents in Unit 102.
As a downside, Unit 303’s balcony overlooks the parking lot. Unit 102, on the other hand, has both an attractive view and easy access to the community's swimming pool.
Managers are responsible for assessing all of the amenities within each of their units, and then applying what they perceive to be an appropriate price for each based on the positive and negative differentiators.
Here's how that could look:
| Floorplan 'A' (Base Rent: $750) | |||
| Unit 102 | Unit 303 | ||
| Amenities | Price | Amenities | Price |
| Pool View/Access | + $50 | Parking Lot View | - $15 |
| AC Unit Noise | - $15 | Vaulted Ceiling | + $15 |
| Next To Garages | + $10 | New Laundry Appliances | + $20 |
| Final Rent: $795 | Final Rent: $770 | ||
Even though each of these units have a negative differentiator in this example, notice that the final rent price is still above the base rent price. This is why factoring unit amenities is an important part of setting rent pricing that maximizes your revenue.
Specials
There are two types of specials apartment managers can use—floorplan-specific discounts and unit discounts.
Floorplan-specific discounts, similar to base rent, apply to all units within that floorplan. When utilizing a floorplan-specific discount, it's key that you subtract your concession amount from the base rent of that floorplan and not the final rent price for each specific unit.
Unit discounts apply to individual units only.
Specials are indeed an effective method for driving more interest in units or floorplans that are struggling—but they must be used systematically. Need help? Here's our guide for running apartment rent specials that don't hurt your revenue.
Lease Length
The standard lease length is 12 months. Lease terms that are shorter than a year increases the price the renter ultimately pays, while longer lease terms qualify for lower rent. The purpose of factoring lease length into rent prices is both to protect your community's revenue while also attracting more renters who seek variable lease terms.
Unit rent
Unit rent is the final rent price. It's a significant number because it reflects the real value of the unit itself.
- It's foundation is the base rent of the floorplan it belongs to.
- It charges for unit amenities, accounting for the positive and negative differentiators of this particular unit compared to others.
- It may include the discount applied from a special because it's struggling to lease as fast as others.
- It will increase or decrease depending on the length of the lease the renter agrees to.
Renters desire price transparency and a great way to achieve that is to show the unit rent—not just the 'base' rent. When they can clearly see unit prices, they can make the best decision. In fact, you're giving them more reasons to choose your apartments over others.
Conclusion
By breaking rent down into base rent, unit amenities, specials, lease length, and the final unit rent, you can set prices that are transparent, fair, and optimized to help you achieve your community's pricing goals.
Need help setting your community's rent prices?
RentVision Revenue Management automates pricing using only your community's supply and demand data—not risky market or competitor data that introduces risks of pricing collusion and erodes trust.
It also restores transparency with unit-level pricing breakdowns that clearly display every component of rent impacting the price, including what changed, why it changed, and how it supports your leasing needs.