How to Successfully Increase Your Fees Without Losing Clients (7 minutes)
Worried that increasing your fees will drive clients away?
This article breaks down why that fear is largely unfounded and how to raise fees successfully without losing clients.
By understanding that property management is a relationship-driven business, and most clients prefer avoiding the hassle of switching agents, you can increase fees with confidence.
While a small percentage may leave, they’re often the most difficult clients. With the right approach, most owners will stick with you.
Learn the strategies and scripts for handling fee increases in Win Your Worth Secrets and start growing your revenue today!
When it comes to increasing fees with your current clients, I’ve been training and working with hundreds of rent rolls across Australia, New Zealand, and the United States for over 20 years, and one of the biggest fears that agencies face is this: "If we raise fees, our clients will leave en masse and go to the cheaper agent down the road."
Let me assure you, this is never the case—as long as you follow some very simple rules.
Let’s break it down.
Understanding Your Client's Mindset
Picture this: an owner signs up with an agent. Before signing, the owner is stressed and anxious, worried about finding a property manager they can trust to secure a good tenant, ensure rent is paid on time, and keep the property in good condition. Finally, they come across an agent they can trust, and immediately, a wave of relief washes over them.
The agent then finds a tenant, and the owner feels even better: "Thank goodness, I don’t have to pay two mortgages anymore." At that point, the owner switches off into what we call peace of mind.
They forget about the property management as long as things are ticking along smoothly—perhaps a few calls here and there about repairs or lease renewals, but overall, they feel the property is well looked after.
Then, two years later, they receive a letter from you. It reads:
"Due to increasing business running expenses and rising legislative compliance costs, along with the fact that we haven’t reviewed our fee structure for five years, we need to adjust our fees. Here’s what they are."
- 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 Initial Reaction: Grumbling, But Not Leaving
At first, the owner is probably grumbling, maybe even a bit annoyed, thinking: "How dare they raise fees? Real estate agents' fees are supposed to be negotiable!" But then they pause and think about the alternative: switching agents.
They remember how stressful it was trying to find a reliable agent the first time, and they really don’t want to go through that anxiety again. Plus, what if they find a cheaper agent who turns out to be worse? They fear ending up in an even worse situation.
Why Clients Stay
Here’s the thing: just like you’ve probably stayed with your bank or health insurance provider despite fee increases, your clients will often stay for the same reasons. It’s too much hassle to switch, and they’re focused on more important things in their lives.
Now, there are three key reasons why owners stay ‘sticky’ with you even when fees go up:
1. You’re in a Relationship Business!
Owners value their relationship with you much more than they do with their bank or phone company, where they don’t know anyone personally.
Property management is a relationship-driven business, much like with their hairdresser or accountant. Owners trust you, and that relationship is hard to walk away from.
2. People Don’t Like Change
Human nature is resistant to change. If an owner is already getting peace of mind from your service, why would they uproot that and risk going through the stress of finding someone new just to save a few dollars? It’s not worth it for them.
3. New Fees Become Normal Quickly
Once your fee increase goes into effect, those new fees will soon become the norm and forgotten. In fact, after a while, most owners won’t even remember what they were paying before.
The Sustainable Loss Myth
When done correctly, increasing fees will only result in a sustainable loss. Typically, 80% to 90% of your clients will stay with you, and those who leave are often the difficult, fee-focused clients who cause more problems than they’re worth.
Yes, some bad clients will pay more and stay, but you will lose the most toxic ones—those that upset your staff, demand extra time and attention, and generally make your job harder.
If you're okay with losing a few bad apples, then raising fees becomes a much easier decision to make.
The Process for Successful Fee Increases
In my book, Win Your Worth Secrets, I share my full 20 years of experience on increasing fees with current clients.
Everything you need to know—the eight-step process, the fee notification letter template, the scripts for when the phone rings—it’s all in there.
The book is free; we’ve paid for the printing, and all you need to do is cover the shipping.
Head over to winyourworthsecrets.com or igtcentral.com to get your copy. You’ll also find all of our podcasts there too.
Need Help? Let’s Chat
If you’re ready to increase your fees but want some guidance, I can help. I’ll review your current fee structure, tell you what’s achievable, and answer any questions you have.
Book a session with me at getbetterfees.com and let’s discuss how you can implement a successful fee increase strategy.
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