It’s important for property managers to compete on service, not fees. New property managers often accept low-priced management contracts, just to bring in business. With rents on the rise and demand for rental housing overpowering supply, now is a good time to sit down with your clients to raise your property management fees (we suggest to about 8-10% of rents collected). Here are some strategies for raising your prices without losing clients.
Never Make Excuses
Don’t make excuses about the economy, inflation, or other justifications. Rather, show them the reason they should stick with you. For example, explain that you are hiring more employees and attaining more tools to reduce vacancies. If you explain it this way, most clients will agree to slightly higher rates.
Show Your True Value
Show that you are going above and beyond for your tenants. If you’re doing things like offering online rental payments and online maintenance requests for tenants, or have a smartphone app that allows you to monitor vacancies without physically being on site, remind your clients of that.
Be Smart When Breaking the News
Do not announce a price increase via email or text. Give your customers a personal heads up way in advance. You can communicate it in your newsletters or an email – just as a reminder or follow-up.
Option vs. Ultimatum
Offer the increase as an option, where your customers get to choose either how much of an increase or limited services at the same price. Offering your services on a three-tiered/good-better-best/a la carte model would allow for more client control. People like to feel they have a say in things. Offering a voluntary choice can strengthen your business relationship with them, rather than fray it. Do not present a price increase as a take-it-or-leave-it sort of situation.
Prepare to Make Some Deals
There will be some who will not respond well. For those customers who are hesitant, an alternative might be to offer them a longer contract term. Phrase this effectively and politely, however, and be clear that you are making a special exception for them.
Do Your Homework
Before considering increasing your prices, know your value and your competition. Regularly check in with industry sites and magazines for the latest trends. If there is something out there you are not currently providing, consider doing so and weigh the risks of not doing so. Do your homework and don’t be afraid to ask for what you’re worth. When people can see the value in something, they will pay the asking price, if it’s affordable.
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