Five Client Types You SHOULD NOT Increase Fees with

Five Client Types You SHOULD NOT Increase Fees with

After many years of working with agencies on increasing fees with current clients, I’ve recognised a pattern that can be trusted. It’s quite simple to understand.

The more ‘peace of mind’ a client has with your services, the more settled and established they are and the happier they are, the easier it is to be able to adjust and increase fees with your clients. The opposite is also true.

Nuts and Bolts

So if you’re considering adjusting and improving your fees due to increased business-running expenses, increased costs with legislative compliance and also because you haven’t adjusted or revised your fee structure for several years or more, here’s the client types that you should NOT increase your fees with:

1- Fixed-term clients

If your clients are locked in a fixed term management period such as 12 or 24 months (fixed term management agreements are common in states like Western Australia and South Australia) then focus on increasing fees at the agreement renewal time.

2- New clients

If you’re like those agencies commonly on the east coast that do not have fixed term management agreements but are ‘open’ from day one, then wait at least 12 months for the newly signed client to settle in and build trust and their peace of mind. After 12 months you can then review the situation with increasing and adjusting your fees.

3- Purchased clients

When a rent roll is purchased these clients had no choice in choosing their new agent when they were transferred over in a rent roll purchase. You must NOT change their fees until they have built trust and are settled again. This usually takes at least 12 months.

4- Unhappy clients

This one is pretty easy to understand. If a client is unhappy with your service (whether its your fault or not) then you mustn’t increase your fees with them. Though they may stay if they’re generally unsettled, you will add ‘insult to injury’ by increasing their fees and you can fairly bet they will pull management, leave your agency and seek better peace of mind with another agency down the road.

5- Vacant property clients

If a property might be vacant in the near future, is pending vacant or is actually vacant then do not increase your fees with these clients. Wait until the property is re-let for several weeks before advising them you need to adjust fees.

There are two more client types that are commonly avoided when wanting to increase fees.

But this is INCORRECT!

From my experience, these clients should have their fees adjusted like everyone else and should not be excluded from this process.

The ‘money-tight’ client (Yes- you should!)

These clients are generally your lower type of C-Class Landlords. They’re just difficult and do not like to spend any money on repairs and generally have low rent and low fees.

These characteristics should not exclude them from increased fees (even more so!)

The long-term client (Yes- you should!)

If a client has been with your agency a very long time like 10 plus years, this does NOT make them prone to leaving if you increase their fees. The longer they have been with you means they are happy and settled. They understand fees must be adjusted from time to time and with a lot of people it is just expected, like the other services in their life.

Knowing who to NOT increase your fees is just as important as knowing who you should do it with. Get this wrong and it could cost you tens of thousands of dollars in lost income that was not attained.

But get it right, and enjoy the rewards of better profitability
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