Pricing a management business: the percentage is not where the margin is

The monthly management fee is the number owners compare, and it is the least useful place to compete. The work — and the cost — is concentrated in events: placing a tenant, turning a unit, handling an eviction, coordinating a large repair. Which is why the pricing structures that hold up separate the recurring fee from the event fees. A monthly percentage or flat fee for the ongoing work. A leasing fee for placing a tenant, which is where the marketing, showings and screening cost sits. A smaller renewal fee, which is real work and should not be free. Project management on capital repairs above a threshold, disclosed as a percentage. Two decisions matter more than the numbers. First, what is included: a manager who includes routine inspections and a mid-lease check is selling something different from one who does not, and should say so rather than being compared on price alone. Second, what is excluded and billed: surprises on an owner statement cost more goodwill than the amount involved. The trap on the other side is discounting the monthly fee to win a portfolio and then relying on markups and vendor arrangements to make it up. It works until an owner asks, and the answer damages the relationship more than the honest price would have. Know the cost to serve one door — hours of coordination, software seat, insurance, the share of overhead — before quoting. A manager who does not know that number is discovering it one unhappy client at a time. This article is general information, not legal, tax or financial advice. Rules change and every deal is different — check your own case with a licensed professional. Alberto Zaltzberg — Adonait · adonait.com