Eight Keys to Writing an Effective Client Fee Increase Letter

Tuesday, December 05, 2023

Fees need to be reviewed and revised for a number of reasons and once you decide it’s time, a letter will be the bearer of the news to your clients.

An effective letter will bring you success but a poorly thought out letter can cause issues and complications.

Here are eight important keys to assist you:

1- Make it brief!

You must keep your letter brief and to the point. Your text should not cover more than 50% to 75% of the page, and together with addresses, names, and bottom signature shouldn’t exceed one page. If it spreads onto a second page, it’s too long!

2- Get the letter subject right!

Your letter shouldn’t start with ‘Fees and charges going up’ or anything quite that alarming. Instead have the title of your letter ‘Re: Upcoming changes to our management agreement’ or words to that effect.

3- Use a justification paragraph.

Your opening paragraph should be for the justification of the need to revise your fees. Whether it’s that business operating costs and the cost of legislative compliance have gone up or you haven’t revised your fee structure for the past five years, the wording needs to have a compelling reason as to why you’re making the changes.

4- Have a clear effective date.

State in your letter when the fee increases will take effect by a specific day and date (yes, you still need to get the management agreement signed before you can make any legal increases or changes).

5- List your fee increases and amendments.

Be very clear what the new fees and charges will be, for transparency and disclosure. Use a bullet point list. Be upfront! If other fees and charges will be the same perhaps just have ‘other fees and charges remain unchanged.’

6- Refer to the agreement to be returned.

If you’re using a new management agreement then ensure it’s enclosed and make reference to ‘please sign and return within 7 days’ placing importance on it. If you legally can use an addendum instead (get further legal advice on this if you’re unsure) then reference this for a signature and return.

7- Invite queries and questions.

The tail end of your letter should have a couple of lines inviting any queries or concerns to your name and number (included).

8- Whose name should be on the letter?

The person who has the client’s confidence and trust (usually the property manager) should have their name in the signature and as a contact to call for any questions.

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