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The TOP Five Reasons Why Agencies Discount (And Why You Shouldn’t) (9 minutes)
Many agencies fall into the trap of discounting fees (see the TOP FIVE reasons why below), seduced into thinking it will encourage more rent roll growth when it only causes damage to the rent roll (and no real growth).
This video and article outline the five key reasons WHY agencies discount, including the belief that all owners want cheap fees, pressure from competitors, and the misconception that lower fees lead to faster growth.
Discounting is seen as an easy, short-term fix that erodes profitability and devalues service quality.
Let’s dive into the FIVE main reasons why agencies discount their fees.
These insights are pulled straight from the book Win Your Worth Secrets, which is all about helping you get better fees with new clients and increase fees successfully with your current ones.
If you want a copy of the book, it's free—we’ve already paid for the printing.
You just need to cover the shipping. You can grab your copy at WinYourWorthSecrets.com.
Let’s get into it—the five BIGGEST reasons why agencies discount.
1. The Rent Roll is Just an ‘Add-On’ to Sales
A common reason agencies discount is because the rent roll is treated as secondary to sales.
In many real estate businesses, the boss is still focused on sales, leaving little time or energy for property management. The rent roll becomes an afterthought, a tool to generate listings for the sales team.
The problem with this approach is that quality property managers won’t work for discount salaries.
If you’re not generating sufficient fee revenue, you can’t pay competitive wages, which results in lower-quality staff.
This leads to a problematic rent roll that lacks proper management and eventually gets sold off at a discounted price.
- 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.
2. The Belief That Owners Just Want Cheap Fees
Many agents believe that all owners care about is cheap fees, so they discount in compliance with this belief. But this belief is flawed.
The truth is that owners don’t manage their properties themselves because they see it as too problematic.
They need a property manager to take over—and what keeps them awake at night isn’t finding the cheapest agent but getting a quality agent who will give them a quality tenant who will pay rent on time and look after the property.
If you’re constantly hearing, “But the other agent is cheaper,” remember that it’s just a negotiation ploy.
Owners expect to haggle with real estate agents. It’s part of the culture. They’ll ask for a discount whether you’re charging 8%, 7%, or as low as 3%.
The real issue isn’t the fees—it’s your ability to respond confidently with a well-crafted script in response to their discount request.
That’s why I wrote the PM Fee Scripts Secrets book, covering 50 different fee objections and how to respond to them effectively.
Negotiation is a game that owners, sellers and purchasers love to play. Learn how to play it better!
3. It’s the Easiest Difference to Copy (For You and Your Rivals)
Discounting fees is easy. It takes no effort, no investment, and no thought. If your competitors drop their fees by 1% or 2%, you can do the same instantly. This is why discounting is such a common tactic—anyone can copy it.
But competing on price is a race to the bottom. Instead, focus on putting effective points of difference into place that your competitors can’t easily replicate.
For example, I know an agent in South Perth (Western Australia) who put two of her key differentiators on a sign in her window for her rivals to see when they drive by (likely several times a day).
In two years, none of her competitors copied them. Why? Because it requires effort and investment—something most agents won’t bother with.
If it takes effort and investment, you’re likely very safe from anyone doing anything to copy it!
4. Pressure from Other Agents
If you don’t have quality points of difference, you’ll feel like you’re the same as your competitors.
You process applications, they process applications. You do routine inspections, they do routine inspections.
This mentality leads to pressure to match your competitors’ fees.
But when you differentiate yourself, you can step out of the fee discount war and compete on service and added value instead.
With clear, effective points of difference, you’ll no longer feel the need to drop your fees to match the competition.
5. The Belief That Cheaper Fees Lead to Faster Growth
This is one of the biggest myths in the industry: the belief that lower fees lead to faster growth. Many new agents, in particular, start off by offering cheap fees, thinking it will help them grow quickly and reach break-even. But this is completely wrong.
Your growth rate isn’t determined by your fees—it’s determined by your rent roll growth strategies.
In fact, I’ve worked with numerous agents who have increased their fees significantly, only to find that their growth rate remained the same.
They still attracted the same number of clients, and the only ones they lost were the fee-focused owners they didn’t want anyway.
Cheaper fees don’t accelerate growth—they just throw money away unnecessarily.
Don’t Get Caught in the Discount Trap
To avoid falling into the discount trap, focus on differentiating your business with strong points of difference (see our book below for ten of them), charge what you’re worth, and invest in the right growth strategies.
If you want to learn more about how to charge higher fees and increase your revenue, make sure you get a copy of Win Your Worth Secrets. The book is free—you just need to cover the shipping.
Go to WinYourWorthSecrets.com or visit IGTCentral.com for all our books and podcasts.
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.
