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Kicking Your ‘Big But’, and the ‘Law of the Fee Lid’ (12 minutes)
Your ‘fee lid’ is your mindset lock determining how much you can charge.
Sure, the market largely determines your management fees (to a degree), but many other additional fees are actually determined by what you believe!
Change what you believe and this changes what you can charge!
This video and article explore the top three common mindset blockages ‘BIG BUTS’ property managers and BDM’s have, such as “BUT my competitors don’t charge that, so I can’t!” or “BUT owners only want cheap fees, so I cannot charge more!”
These ‘BIG BUTS’ limit your potential for fee revenue growth.
Discover how to shift your fee thinking, enhance service quality, and confidently charge fees that reflect your true worth.
Learn how to navigate fee objections and stand out from the competition without fear, breaking through your personal ‘Fee Lid’ for maximum profitability.
Over the past 20 years and working with hundreds of rent rolls across Australia, New Zealand, and the United States, I've learned a fundamental truth: it's easy to get better fees, higher fees, and even to add more fees.
But what's hard is convincing property managers that this is, in fact, easy.
This mindset resistance (not from the market) is what I call the ‘Law of the Fee Lid’.
Understanding what the ‘Fee Lid’ is.
Your current fees represent the very best you believe you can achieve.
If you could charge higher fees or add more fees, you would, but you’re not!
The ‘Fee Lid’ refers to this mindset limitation—you're locked into thinking you can't go higher, even though you can.
When I tell property managers they can increase and get higher fees, I usually hear something like, "But Darren...," and then tell me it’s not possible, which is exactly what holds you back.
These ‘buts’ are restrictions, and they reflect the mindset that prevents you from seeing what is actually possible.
Let's dive into the top three ‘big buts’ I often hear and why they don't hold any water in reality.
- Standard Marketing Fee This fee covers the costs of listing properties on portals. In Australia, you’re likely familiar with the two major portals that charge fees. New Zealand has its own marketing portal costs as well. Make sure you’re covering those costs, and if you haven’t updated your fee recently, ensure you’re adjusting it, as portal charges tend to increase on a regular basis.
Don’t forget to factor in any additional marketing efforts, such as Facebook or LinkedIn campaigns. Always check your local legislation to ensure you can on-charge these costs. - Professional Photos If you’re taking professional photos for listings, you should be charging a fee to cover those costs. It’s a straightforward service, but make sure it’s reflected in your fee structure.
- Video Walkthrough Fee Offering video walkthroughs is becoming increasingly common. If you’re walking through the property with a camera or phone, narrating as you go, that takes time—editing and uploading included. You should be charging for this service, and the suggested fees are detailed in the book.
- Virtual Tour Fee Using high-tech tools like Matterport or 360-degree cameras to create virtual tours can be time-consuming and require expensive equipment. This is another service where you should be charging a fee for the value you provide.
Big But #1: "But what's the management fee for?"
Many property managers believe their management fee should cover everything. However, where's the rulebook that says what a management fee has to cover?
After 20 years in the industry, I still haven't found one (if you do, please email me a link!).
Some property managers insist that fees like routine inspections or repairs be bundled into the management fee.
But if that were the case, why do most agencies charge separately for leasing, marketing, and lease renewal fees? Why are these fees separated from others?
It's all about mindset—what you think should be included in your management fee is entirely up to you.
In fact, collecting rent is essentially a form of soft debt collection.
Debt collection agencies charge 20-30% for their services, yet many property managers think that the management fee typically should cover more than just rent collection.
We say that ensuring the rent is paid on time is enough to justify your management fee, so if you believe that, then you’re free to charge other fees separately.
Big But #2: "But my rivals aren’t charging those fees."
Another common objection is that competitors aren’t charging higher fees, so you feel like you can’t either. This leads to what I call ‘The Law of the Main Game’.
Owners are focused primarily on your management fee. When they raise fee objections, it's usually centred on that, NOT the other fees you're charging.
In fact, I've worked with agencies that have successfully implemented double leasing fees, routine inspection fees, and even tenant exit fees—despite their competitors not charging for those services at all.
As long as your management fee is within the accepted market range, you can add on fees for additional services without losing clients.
Owners care about the overall quality of service, and their attention is fixated on the management fee.
Everything else becomes a much lesser issue.
Big But #3: "But owners only care about cheap fees."
The third ‘big but’ I often hear as a wrong mindset is that ‘owners are only concerned with cheap fees’. This simply isn’t true!
Most property owners hire property managers because they don't want to handle the day-to-day hassle themselves.
They're not losing sleep over finding the cheapest agent; they're worried about getting the wrong tenant, not receiving rent on time, or a bad tenant damaging their property. Their true motive and what they are really seeking is peace of mind, not bargain-hunting on fees.
So why do they still ask for discounts?
Because in real estate, negotiation is part of ‘the game’.
Owners have been conditioned to negotiate on fees in this industry, but that doesn't mean they're only looking for cheap fees.
They're looking for service quality and reliability, and that’s why they’re coming to you.
Get Good at the Game of Negotiation
In real estate, it's common to negotiate fees, even though it doesn’t happen in most other industries.
Owners don't ask for discounts at the supermarket or at a fast-food drive-thru. But in real estate, it's expected and encouraged that you do!
When an owner asks if you can match a cheaper fee from a competitor, it’s a sign that they’ve already decided they want you!
They just want to see if they can get a better deal before signing the paperwork. Understanding this can shift your mindset and give you the confidence to hold firm on your fees.
How to Break Free from Your Personal ‘Fee Lid’.
To truly break free from your ‘Fee Lid’, you need to overcome these mindset restrictions.
It’s about what you believe you can charge. If you can position yourself as a quality agent offering peace of mind, owners will value your service over your fees, even if you cost that bit more.
For more on how to navigate fee objections and increase your fees, I recommend checking out our book, Win Your Worth Secrets, where we cover these topics in detail.
We also offer the book the PM Fee Scripts Secrets, another valuable resource that tackles up to 50 common fee objections.
You can get both books at IGTCentral.com (just pay shipping).
Remember, it’s not the market that limits you—it’s your mindset. Break through the ‘Fee Lid’ and unlock your potential for higher fees.
WIN YOUR WORTH SECRETS
The complete PM HANDBOOK on how to WIN THE BEST FEES with new clients and INCREASE YOUR FEES with your current clients without losing them to cheaper agents
PM FEE SCRIPTS SECRETS
Access 50 (plus) fee objection responses.
[UNLOCKED] How to WIN the deal and your FULL FEES with CONFIDENCE...no matter how low your rivals discount or reduce their fees.
Every PM fee objection you'll ever face has an effective response! You'll find it...in this book!
MASTER YOUR
TIME SECRETS
The kick-butt time management handbook for crazy busy property managers who want to beat burn-out, reduce stress, take control and get their life back!
PM LEAD SECRETS
[UNLOCKED] PROVEN Strategies, Hacks and Techniques.
Revealed...secrets to 40+ effective ways to generate hot leads to grow your rent roll without relying on salespeople.
Win Your Worth Podcast Show
How to win the best property management fees in the marketing with confidence, no matter how cheap your rivals discount or reduce their fees.
Top Growth Podcast Show
Rent Roll Growth Strategies...ready to go!
BDM Coach Podcast Show
BDM skills and techniques that will take you to 20-30 properties a month.
