[No Rent Roll Growth Required] How to Double Your Profit Margin!

Tuesday, December 05, 2023

It’s much easier than you think!

The Fear Factor

Principals and property managers in just about every department across Australia have never seriously considered increasing their income by adding and increasing fees with their current clients. They have never considered it, or have rejected the idea through fear of damaging their business and losing clients.

Our experience is that it not only works but works exceptionally well. There are several good reasons why (See our article ‘Eight Rock Solid Reasons Why Increasing Income Works’).

The Average Profit Margin

We know, as a consultancy team across Australia, that the average income per property per year is approx $1000 in property management departments. We also know the average net profit per property management department is about 18%.

This means that the average annual profit margin is about $180 per property for management.
Therefore, to double your profit margin you only need to add another $180 in fees per property per year, without increasing your costs.

How Do You Do This?

Easy- you add and increase fees!

This may mean increasing previously discounted management fees, restoring discounted letting and lease renewal fees, or adding new fees like routine inspection fees, annual statement fees etc.

You must focus on adding and increasing fees that bring a predictable recurring income, not just ‘one-off’ fees like tribunal attendance fees that may not happen.

The results of a fee maximisation campaign always pleasantly surprise those that have overcome their fear of losing clients, get brave and just do it!

The main problem is that most principals and property managers think that their clients will walk. We have found this to simply not be true, as long as a reasonable level (or better) standard of service is in place and clients are generally happy. That is the key!

What Do You Look For?

What is your average income per property per year, and what is your net profit margin per property, per year?

Work it out and then work on what fees you need to add or increase to achieve this figure.

Make sure your profit and loss information is separate from your sales department so you know if in fact your property management department is profitable or not. This exercise is worthwhile.

All the best!


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