The $46.8K Cost of Discounting: Why You Can't Afford to Ignore It (5 minutes)
Discounting your fees by just 1% can cost you a staggering $46,800 over five years!
This article breaks down the real financial impact of offering discounts and explains why it’s one of the most expensive mistakes property managers can make.
Instead of lowering your fees, invest in differentiating yourself with quality services like virtual tours, professional marketing, and technology-driven inspections.
These small investments will set you apart from competitors and justify higher fees.
Don’t fall into the trap of discounting—learn how to stand out and charge what you’re worth today! Discover more strategies in Win Your Worth Secrets.
Let’s talk about the real cost of discounting your fees and why it’s one of the most expensive mistakes you can make. I’m going to share some numbers with you that might just shock you.
When I suggest that agents equip themselves with quality points of difference, like virtual tours for marketing or using inspection technology like Inspection Express, I often hear, “But Darren, that costs money!”
Here’s the reality: Discounting will cost you far more in the long run. Let’s break this down.
The Cost of Discounting 1%
Let’s assume you’re managing a property that rents for $600 per week. For our friends in the USA, that’s roughly $2,600 per month (using 4.33 weeks per month).
Now, when owners ask for a discount, they usually focus on your management fee. Most of the time, they’re trying to get you to drop that fee by 1%—sometimes 2%, but 1% is more common.
Why are they fixated on this? Because it confirms what I call the Law of the Main Game—owners are focused on the Management Fee above everything else.
- 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.
The Numbers Behind a 1% Discount
So, what does that 1% discount really look like?
• 1% of $600 is $6 per week.
• Over a year, that’s $312.
• If you keep that management for five years, that’s $1,560 lost over that period.
Now, let’s say you do this for 30 properties a year, and you keep those properties for five years. What does that look like?
• $1,560 x 30 properties = $46,800 in lost income over five years.
Shocking, right? That’s nearly $47,000 just because of a 1% discount on your management fees!
The Most Expensive Point of Difference
If I told you that you could invest a fraction of that $46,800 to create quality points of difference that will make you stand out, what would you say?
In my book, Win Your Worth Secrets, I’ve outlined ten of the best points of difference that work the best!
These are strategies that can help you impress prospective owners, differentiate yourself from your competitors, and justify charging higher fees.
We’re talking about things like:
• Offering virtual tours embedded in your ingoing and outgoing inspections,
• Providing property owner handbooks or tenant handbooks,
• Ensuring all your marketing looks top-notch and professional.
These investments are minuscule compared to the cost of discounting.
Discounting: The Most Costly Mistake
The actual cost of discounting far outweighs any investment in creating real value for your clients.
Instead of defaulting to discounting, which is the go-to when you don’t have effective points of difference, invest in standing out. Without differentiation, you’ll feel pressured to follow your competitors down the discounting path because, in your mind, you’re offering the same service.
But when you separate yourself and differentiate your services, you’ll feel confident charging what you’re worth, regardless of what others are doing. You won’t be dragged into a race to the bottom because you’ll know your value and your clients will too.
The Solution: Quality Points of Difference
Here’s the thing: differentiating yourself with quality points of difference will cost far less than the $46,800 you’d lose from discounting 1% over five years. It’s a no-brainer.
In our book Win Your Worth Secrets, I’ve detailed the ten best points of difference you can implement right now to stop discounting and start increasing your fees. These are tried and tested strategies that work.
The book is free—we’ve paid for the printing. All you have to do is cover the shipping.
Head over to IGTCentral.com, get your copy, and start implementing these points of difference today.
Discounting is NEVER Sustainable!
Remember, discounting is not sustainable.
It’s not a strategy that will help you grow your business. The key is to differentiate yourself and stand out in the market by offering value that justifies your fees.
So, make the small investment in setting yourself apart. Get the book, read through the ten points of difference, and equip yourself to win without resorting to discounting.
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