What Black Friday Can Teach BTR Operators About Pricing
I have a confession to make. I bought a new pair of running shoes on Black Friday. They were 40% off. I felt like a genius.
But here is the thing. I had to plan for it. I had to research which retailers were likely to offer the best deals. I had to add the shoes to my wish list two weeks in advance. I had to set a reminder on my phone so I didn’t forget. And on the day itself, I had to drop what I was doing and place the order before the stock ran out.
My wife, on the other hand, bought the same brand of shoes two weeks later at full price. She walked into a store, tried them on, and bought them. No planning. No research. No reminders. Five minutes, start to finish.
We both got exactly the same shoes. We both think we got the better deal. And the retailer? The retailer got both of us.
That, in a nutshell, is why Black Friday works. And it has more to teach Build to Rent operators than you might think.
The Genius of Black Friday
The common view is that Black Friday is just a way to shift Christmas shopping forward by a few weeks. Bring forward the transaction, but at a lower price. Under this theory, Black Friday is a net negative for retailers. They are simply cannibalising full price sales that would have happened in December.
I disagree.
“The real genius of Black Friday is that it segments customers. Not by age, gender, or postcode, but by something far more useful: their willingness to trade effort for money”
The person who plans their Black Friday purchases weeks in advance, researches the deals, sets reminders and acts quickly when the sale goes live, is telling you something profound about themselves. They are telling you that they are prepared to invest time and effort to save money. That person was never going to pay full price in December. Ever. They would have gone without, bought secondhand, or waited for the Boxing Day sales. You have not cannibalised a full price sale, because that sale was never going to happen.
Meanwhile, the person who walks into a store on December 15th, picks something off the shelf and buys it without blinking, is a completely different animal. They value convenience. They do not want to plan ahead. They would rather pay full price than spend two weeks monitoring deals. These two customers coexist in the same market. They buy the same products. But they are fundamentally different people with fundamentally different priorities.
The brilliance of Black Friday is that it allows retailers to charge different prices to different people for exactly the same product, without the social awkwardness of explicit price discrimination. Imagine if a department store tried to do this transparently. “Full price for people who value convenience. 40% discount for people willing to plan ahead.” There would be outrage. But wrapping it in a calendar event makes it socially acceptable.
From Blunt Instrument to Precision Tool
Back in 2019, I wrote an article criticising Black Friday. At the time, most retailers were running blanket promotions. Everyone got the same discount. The result was a revolving door where nobody won. Savvy customers simply delayed purchases from early November and brought forward purchases from December, paying less for products they would have bought at full price anyway.
Six years on, the smarter retailers have learned from their mistakes. The best ones no longer run blanket discounts. They use data to target promotions at specific customer segments. They personalise offers based on browsing history and purchase patterns. They create tiered deals that reward loyalty and encourage higher spend. They have figured out that the real value of Black Friday is not the discount itself, but the information it reveals about customer behaviour.
In other words, they have evolved from using a sledgehammer to using a scalpel. And the results speak for themselves.
What the Airlines Figured Out 40 Years Ago
Airlines were the first industry to master this concept. They realised that the business traveller who books a flight on Monday for a meeting on Wednesday is a very different customer from the family who books six months out for their annual holiday. Same seat. Same destination. Same arrival time. Vastly different willingness to pay.
So the airlines created structures that let these customers self select. Book early and commit to rigid dates? Cheap ticket. Need flexibility to change at the last minute? Pay more. Want to choose your seat, bring luggage, and get a meal? That costs extra too.
Nobody calls this unethical. We accept it as normal. The family gets their cheap holiday and the business traveller gets the flexibility they need. Both are happy. The airline captures the full value from each.
Hotels do the same thing. Concert promoters are catching on. Even sports stadiums have worked out that the view from behind the goals is not worth the same as the view from the halfway line.
And yet, most Build to Rent operators are still charging the same price to everyone, regardless of how they behave.
Letting Tenants Self Select
The lesson from Black Friday, and from every industry that has mastered revenue management, is not that you should charge different prices to different people based on who they are. That would be discriminatory and, in many cases, illegal. The lesson is that you should create structures that let people reveal their own preferences through the choices they make.
Here are some ways Build to Rent operators can do this.
Lease term pricing. A tenant who wants a six month lease will create twice as many vacant periods as a tenant who commits to twelve months. The marketing costs, the void periods, the administrative burden – all of it doubles. Charging a premium for short lease terms is not gouging. It is basic maths. But it also reveals something valuable: the tenant who happily pays the short lease premium is telling you they value flexibility over cost. The tenant who locks in for twelve months is telling you they value certainty and are prepared to commit for a lower price. Let them choose.
Move in timing. Every rental market has seasonal peaks and troughs. A vacant apartment during peak season is worth more to the tenant than the same apartment during a quiet period. An operator who offers a modest discount for tenants willing to start their lease during a slow period is not leaving money on the table. They are filling an apartment that might otherwise sit empty for weeks. The tenant gets a better deal. The operator gets an occupied unit generating income. Everybody wins. And importantly, if you can time the end of that lease to coincide with the next peak in demand, you can re-let that apartment from a position of strength.
Furnished versus unfurnished. A furnished one bedroom apartment might command a 20% premium over unfurnished. But a furnished two bedroom might only command 5%. Why? Because the person renting a furnished one bedroom is often a corporate relocator or short term worker – someone whose employer is paying the bill and who values convenience above all else. The person renting a two bedroom is more likely to be a couple or a family who already owns furniture. Same building. Different customers. Different willingness to pay for the same inclusion.
The early bird versus the last minute tenant. When you have a vacancy coming up in 60 days, you have a choice. You can market it immediately at a modest discount to lock in a tenant early, reducing your risk of a void period. Or you can hold your price and hope that someone turns up closer to the date, willing to pay full freight for availability.
But here is where it gets interesting, because this cuts both ways. The last minute tenant might seem desperate, but so is the operator with a vacant apartment that has been sitting empty for three weeks. The tenant needs a home quickly. The operator needs to stop the bleeding on an empty unit. Neither party has a strong hand, and the right price depends on who is under more pressure. That is not something you can solve with a spreadsheet and a gut feel. It requires an understanding of your current occupancy, your forward demand pipeline, and whether the market is trending up or down.
The point is not that one approach is always right. The point is that the early booker and the last minute tenant are different people with different circumstances, and their behaviour tells you something valuable about their price sensitivity. The smart operator reads those signals and responds accordingly.
Renewal timing. When you offer renewals matters as much as what you offer. The tenant who accepts a renewal six months before their lease expires is organised, values certainty, and probably loves living in your building. The tenant who waits until six weeks before expiry is either shopping around, uncertain about their plans, or hoping for a better deal. These are not the same customer. You can and should price accordingly.
But Won’t the Neighbours Talk?
This is the objection I hear most often. “You can’t charge different rents in a Build to Rent building. The tenant in apartment 301 will talk to the tenant in apartment 302. They will discover they are paying different rents. Someone will get angry.”
It is a fair concern. But it is based on a misunderstanding of what we are talking about.
When people hear “different prices for different tenants”, they picture the airline model where the person in seat 14A paid $200 and the person in seat 14B paid $1,400 for exactly the same flight. That kind of disparity would rightly cause outrage in a residential building.
But that is not what we are talking about. We are talking about subtle differences of 5 to 10 per cent, driven by factors that are easy to explain and easy to justify. One tenant signed a twelve month lease, the other signed for six months. One moved in during winter, the other during peak season. One renewed early, the other waited until the last minute. One has a corner apartment with views, the other faces the courtyard.
These are not arbitrary price differences. They reflect genuine differences in value and cost. And when tenants compare notes, most of them understand this intuitively. They understand that the person who locked in for longer got a better deal, just as they understand that booking a holiday six months in advance is cheaper than booking it the week before.
The individual differences might be small. But across a portfolio of hundreds or thousands of apartments, they add up to something very significant indeed.
The Trap to Avoid
There is, however, a cautionary tale in the Black Friday story. By making deep discounts predictable and annual, retailers trained an entire generation of consumers to wait. Why pay full price in November when you know that Black Friday is around the corner? This was the trap I described in my 2019 article, and while the best retailers have since found their way out of it, many are still stuck.
It is the same mistake that pizza shops make when they constantly run discount vouchers. Eventually, nobody pays full price because everyone knows a deal is always coming.
Build to Rent operators need to be careful not to fall into this trap. If your building becomes known for offering discounts to fill vacancies during quiet periods, prospective tenants will learn to time their search accordingly. If you always drop prices when a unit sits vacant for more than two weeks, the market will notice.
The solution is not to abandon flexible pricing altogether. The solution is to make it dynamic, responsive, and data driven. Airlines do not have a “Black Friday for Flights”. They have algorithms that respond to demand in real time, offering different prices based on booking patterns, route popularity, and seat availability. The price changes constantly, but the logic behind the change is invisible to the customer.
That is the difference between a blunt instrument and a precision tool.
The Bottom Line
The overarching theme here is simple. Stop treating all tenants like they are the same person. They are not. They have different time preferences, different flexibility needs, different value drivers. Your job is to create pricing structures that let them self select into the segment where they belong, and then capture the value accordingly.
The retailers who figured out Black Friday are doing this at scale. The airlines have been doing it for 40 years. Hotels do it every day. Even concert promoters have caught on.
Build to Rent operators are still acting like they are selling commodities. They are not. They are selling housing as a service. And services can be segmented in ways that benefit both the operator and the resident, without ever touching a protected characteristic.
My wife and I both got the same shoes. We both feel like we got a great deal. The retailer got the maximum revenue from each of us.
Is your building doing the same thing? Or are you still charging everyone the same price and hoping for the best?
Post Script
In case you were wondering, my wife ended up paying $20 less than I did. It turns out the retailer quietly dropped their “full price” between Black Friday and Christmas. She did zero research and got a better deal than I did after two weeks of planning.
I should have used an algorithm.
If you would like to discuss how customer segmentation and dynamic pricing can work for your Build to Rent operation, get in touch with Price Wizard at wizard@pricewizard.io.
