DGS 309: Property Management Pricing Principles That Innovate Property Management Growth With DoorGrow podcast

Content provided by Jason Hull, DoorGrow | #1 Property Management Growth Experts with Jason, and Sarah Hull. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by Jason Hull, DoorGrow | #1 Property Management Growth Experts with Jason, and Sarah Hull or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://podcastplayer.com/legal.

Property Management Growth with DoorGrow »
DGS 309: Property Management Pricing Principles that Innovate

20h ago 24:47

MP3•Episode home

If you’ve ever worried that changing your pricing structure or raising your fees would scare away your property management clients, you are likely not making enough money for the work you and your team are doing.

In this episode of the #DoorGrowShow, property management growth experts Jason and Sarah Hull dive into the psychology and strategy behind the innovative 3-tier hybrid pricing model.

You’ll Learn

[01:08] Addressing the Common Fears of Changing Pricing

[09:10] Creating 3 Pricing Tiers Based on Psychology

[16:58] Shifting Your Mindset Surrounding Money

[21:12] Distinguishing Your 3 Pricing Plans

Quotables

“Unless you want to be the cheapest and deliver the most cutthroat, like awful service, and just target the cheapest owners, which have the highest operational cost and the lowest margins, and just hemorrhage money and not be able to grow your business, that's the game you can play.”

“That psychological impact of investing in yourself financially, doing something to financially invest in leveling up you and your business creates this unconscious perception that… you are worth being invested in.”

“If you have good pricing, you have a really optimized pricing model, and you know how to sell it, it actually changes your portfolio. It incentivizes you having better properties.”

Resources

DoorGrow and Scale Mastermind

Transcript

Jason Hull (00:00)

What would happen

if you doubled your pricing and half of your clients quit. well, then nothing would happen. Nothing would change. then I say, what would happen to your operational costs?

All right, we are coming to you from Mexico. We are Jason Hull and Sarah Hull, the owners of DoorGrow, the world's leading and most comprehensive coaching and consulting firm for long-term residential property management entrepreneurs. For over a decade and a half, we have brought innovative strategies and optimization to the property management industry. At DoorGrow, we have spoken to thousands of property management business owners, coached, consulted, and cleaned up hundreds of businesses.

helping them at doors, improve pricing, increase profit, simplify operations, and build and replace teams. At DoorGrow, we believe that good property managers can change the world and that property management is the ultimate high trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management business owners and their businesses. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property management entrepreneurs win.

Now let's get into the show. All right. So we're going to be chatting about what today? Pricing. A little bit about pricing. we have coached and consulted property managers on pricing for a long time, like over a decade. And we've brought some innovative strategies. Like we were first to bring to market really and push

into the industry the three tier sort of pricing model having three plans. And this was based on the psychology that there's three types of buyers, cheapos, normals and premiums. You know who they are, right? You've dealt with them. And so, and then more recently in our evolution, we've been pushing a hybrid model. I got that idea originally from Scott Brady. Shout out to Scott, smart guy. And we innovated on that and developed

our own model for clients to make that really effective. And so this is something that we've coached quite a few people on. we consistently see some challenges come up over switching their pricing. first, what are some of the fears or concerns that come up, About switching pricing? Yeah. Everyone's always worried, oh my god, what if I lose all of my clients? Right. I'm going to change my pricing, and everyone's going to leave me. And we've helped a lot do that.

they lost all their clients. No, it never happens. It never happens. No, if they lose any, it's typically their worst clients. And then they end up finding that that was a blessing. Yeah. So they end up making money by getting rid of those and they're charging more money. So really they're increasing their revenue. So a lot of times to get them over that hurdle, I usually use this example. I say, What would happen

if you doubled your pricing and half of your clients quit. Like we did something crazy and extreme. So we go to the extreme. And what do people usually say at first? well, then nothing would happen. Nothing would change. I'm like, really? So then I have to ask deeper questions. So what do mean nothing would happen? Well, I'd still bring in the same amount of revenue. I've doubled my price, half the clients quit. I still have the same revenue. And then I say, what would happen to your operational costs? So they start thinking.

So you probably already figuring this out right now, listening to this. So what would happen to your operational costs? They'll say, it'd be cut in half. I'm like, would it? If you lost all of your worst properties and worst owners, like the most difficult, what would happen to your operational costs? It would probably be a fraction, because this is the 80-20 rule, right? 20 % of the properties, 20 % of your owners are eating up 80 % of your team and staff's attention. And so it might be a lot greater than that.

And so what would happen then to your profit margin? then they start to figure this out, right? And they say, look, we're not gonna do something that extreme. We're not gonna go that extreme. But if we raise your revenue a bit and we decrease your operational cost a bit without changing anything else, even if you lose some clients, you're going to have more profit. That's what actually matters. So that's one of the first initial things. It's just a mindset thing. And some are really afraid, like my owners won't.

They won't go for it. Like, I can't do it. No, I can't change the price and then they'll all leave. And that, I've noticed, it's very scarcity mindset. Right? Your owners aren't with you because you charged the least amount of money, hopefully. And if that's why you have clients is because you're the cheapest one, then that tells me that you have a lot of the cheap clients and you have a lot of clients that don't actually value you or your team.

or your services or anything that you do. And that feels like a really impossible game to win. Because then to win the game, all you have to do is just be the cheapest one. So there's another company that comes along and says, you know what? I'm going to be even cheaper. Well, what's going to happen? You'll lose almost all of your clients then. If it's only about the money, you'll lose almost all of your clients. And the only way to win that is what? A race to the bottom. That is nowhere to be in business.

And so some of the other challenges we deal with when helping our clients figure out their pricing, you know, we give them everything. We're like, here is how to do this weird hybrid model. Here are the things to include in your three plans. Here is a spreadsheet to figure out and compare to your competitors pricing to make sure you're in the realm of reality. We give them all the stuff and then they'll come back to us sometimes with what? A mess. Yeah.

It's like they don't and we have a training we have a training called pricing secrets where we explain all this and the principles that you need to make sure you're aligned with to make sure it's effective and then we'll get this really overly complex complicated messy model where they've got every fee is a different dollar amount for each of the three plans and so somebody looking at this would be like this one is a percentage and that one is a dollar amount and that one's back to a percentage and that one's so then in order for someone to

look at that and go, well, what would this actually cost me? It is now this very complex math formula that the further you go down your pricing sheet, the more math you have to do. You have to go, okay, well, this percent of that number, but now plus this flat fee and now, it's another percent of a different number. And then it's going to take you minutes to try to calculate what is my actual cost on this one plan? And then you have to do that three times because you have three different plans.

then it's so complex that it's hard to understand, it's hard to explain, and it's definitely going to be hard for people to sell, which means it's going to have a really low adoption rate. And then it's going to be something, well, that didn't work. It didn't work because it was too complex. So we need to find the balance. I don't want it to be so simple that it's just, you know, we charge 8%. But I don't want it to be so complex that

Someone just easily by looking at it can't go, okay, I have a pretty good gist of how much this is actually going to run. Yeah. We have an advantage too, because you know, there's concerns. There's concerns. Like everybody's like, well, we can't talk about pricing because of the antitrust stuff and NARPM rules and all this kind of stuff and it's collusion. So what's cool is I'm not a property manager. I'm not anymore. You're not a property manager.

We can talk about pricing with anybody. And so when we're coaching our clients, we can talk about their pricing. We're not colluding. And so we have that advantage that we can coach and help. that not just that, but we have a pretty good idea of what pricing, because the hundreds, the thousands of property managers that we've talked to over the last decade and a half, we have a perspective. Like I can pretty much know based on...

market or when you tell me the average rent, like where pricing should be, what is normal, what other companies are probably charging that market. We still tell our clients to do some competitive research and analysis to figure out what their competitors are charging. Cause that helps them feel more comfortable with pricing. And one of the key things I've noticed is they'll pay attention to, I mean, there's really only two types of pricing that really matter in each market. It's the most expensive company.

and the cheapest. The middle's the fuzzy gray area where it doesn't matter. Your pricing isn't really the issue where you're not really competing effectively on price. But if you're the most expensive, people trust and expect and believe that you're the best, which is a great place to compete and be. If you are the cheapest, then that's a hard game to play. And so we're usually coaching our clients, don't play the game of trying to be

the cheapest company in your market. That's not a fun place to be business-wise. And it's really difficult to deliver great service. And so unless you want to be the cheapest and deliver the most cutthroat, like awful service, and just target the cheapest owners, which have the highest operational cost and the lowest margins, and just hemorrhage money and not be able to grow your business, that's the game you can play, but that's not the game we coach our clients on playing.

So we teach them how to be perceived as the best in their market, and how to compete as the best in their market. And pricing is one of those psychological indicators that buyers look at to figure out, they going to be good? Are they better than the other guys? Are they the best? And so there's a lot of psychology that goes into pricing, which is how we kind of deal with it. Any other issues we should touch on that we notice with clients with pricing? So you.

In short, what Sarah was talking about is we need to make sure the pricing is easy for them to make a distinction between the three plan options, if you have the three plans, and it's not overly complicated so that they don't have to do a bunch of math to figure out which plan should I choose and which one's going to be best. And it's obvious. it's not going to be based. The thing I've noticed lately though is a lot of clients, when they get into the pricing, they mistakenly think the three plans are based on

It's based on money and it's not psychologically the premium buyers don't care as much about money the cheapos do and so the plans are not based on money and so if they what they're trying to make different in each of the three plans is dollar amounts so like if you spend more on our plan you get discounts on all these individual fees and that is that the most premium clients that are premium buyers don't care about discounts they're not worried about the money and so I know when a property manager is presenting pricing like this

they're a cheapo. They're in that category. They're viewing everything through the lens of money instead of being taken care of a premium service or status or what premium buyers look for. And so that's the other blind spot or challenge we've noticed in pricing is that in order for us to coach clients effectively, often we have to figure out which of the three types of buyers they are and what their inherent blind spot is and get them and if they're a cheapo, which is why they have cheap pricing and they're not getting

enough and they're not being taken care of well enough by their business, we have to get them to change their mindset and get them to stretch and stop asking for discounts and coupon codes and get them to be somebody that is willing to spend full price so they expect others to be willing to pay for a service full price. And that's a bigger challenge. Yes. So essentially what we get to do is figure out where they're at so that we can help kind of coach them on the opposite. Because it's hard for

a cheapo buyer to understand the premium buyer because they're just not in that mindset. the opposite is true. The premium buyers, they don't understand the cheapo buyers at all. Like, don't understand why you can't just pay, why are you so worried about $10? I don't understand why that's an issue. I mean, you spend $10 and you shouldn't have to think about it. I don't know why that's an issue. usually where the meat in the middle is kind of that middle plan.

So I think a lot of people get their middle plan dialed in really well, and then they struggle with their opposite. And that's, think, sometimes why they get a little bit stuck on their pricing. Because they're either trying to do too much with it, they're making everything really complex, they're not really understanding the opposite type of buyer that they are.

That's okay, don't fully have to understand that when you have your coaches to lean back on. The question we get most of the time, what do I put my premium plan? What am I supposed to do in a premium plan? I don't know. Should I do this? Should I discount? Should I add this? What would I put in the premium plan? And that tells me that if that's where they're struggling, it just means that they haven't...

really adopted that psychology of premium buyer yet. It doesn't necessarily mean that they're cheapo. I think it just means that they're perhaps in the normal category. Because same thing, if you're a normal buyer, it's going to be hard for you to understand the premium, and then it will probably also be hard for you to understand cheapo. So I usually compare it. This is, I think, an analogy people can kind of understand, is when you go to book a flight.

So right now we're in Mexico. If we go, hey, instead of going back to Austin, let's go to California and visit Jason's family. Okay. Well then we need a flight from Mexico to California. How would we do that? We would go and book, right? But when you book, there's different ways to book a flight. You can just go right to the airline. You can go on Google flights, or you can go like, what are those, know, kayak and the discount prices. So.

Maybe you're thinking, okay, I'll get a last minute ticket and we won't get to sit together, but it's okay. They could throw me. How many times have you heard people say this? they could throw me in the baggage compartment. I

Right? Because they're like, I am just trying to pay the least amount of money and still get the thing that I'm looking for. So the cheaper buyers like that, they're like, hey, I want the discount code. I'll do the red eye overnight. I'll do the early morning. I don't care if I have to wake up at 2 AM for like a 430 flight. I'm OK with that. I'll sit way in the back. We don't need to sit together. I'll pay for my baggage as extra. I just won't pack baggage. It's OK.

Like I'll shove everything in a carry-on. That's one way to book it. Or the other way to book it is, I'm just gonna go and do the search and then whatever looks like a decent option for a decent price, I'll book that. Or the other option is, I want to make sure that this is the most convenient and easy thing for me. So if there are multiple flights at different times,

Sometimes the early flights might be a little bit less expensive than a flight midday So someone might go yeah, the midday flight is more expensive However, the midday flight means I don't need to be up at 2 in the morning 3 in the morning 4 in the morning and I would rather pay more money so that I don't need to be up at 4 a.m. That's a trade-off

I would rather buy the first class seat because then I know for sure I'm going to be in first class. I'll get the premium snacks or I'll get a meal. I might get a hot towel. I will be more taken care of. I know that I will have more room. I'll get to board first. I'll get to get off first. And they know that they're taken care of. And they're OK to spend more money because they know that they will be taken care of. So depending on what psychology you have, that will probably be.

how you decide to make many, if not all, of your purchasing decisions. Yeah, so I think our advantage, you know, some people have grown up as a premium buyer. They grew up in a premium sort of silver spoon in their mouth environment. That's not me. It's not you. Not me either. Right? Some people have grown up in a really, really cheapo environment, right? And...

And so the challenge is that kind of creates this inherent blind spot. The advantage I feel that you and I have as coaches is one, we've been in the cheap environment. I remember my mom like packing cans of food when we would take a vacation because, and cereal, because she wanted to make sure we had, you know, supplies and food to eat rather than going, doing expensive stuff, right? Which is just funny to think about, right? Now.

Me and my brothers, joke about this. So I think the advantage is we've been all three and we now are, you know, we're hanging out in Mexico, we're having a very premium sort of buyer experience and I don't even think about what things cost. I don't think about the money, I just think about what experience I want to have and so, you know, there's been that shift. But I can empathize and connect and go back to understanding how a cheapo thinks or how in more normal.

buy our things. But in general, my default is I'm not really thinking about the expensive things. I'm thinking about what am I going to get and how is it going to help? Because there's a lot of things we do that make us a lot more money than they cost, even though they're very expensive. And so one of the things that helped me to do that, and I don't know about you, but one of the things that's really helped me shift my mindset was getting high ticket coaches. It's getting coaches that could help me.

I was investing and spending of what I felt like was a lot of money. And we're not cheap at DoorGro, right? We're, some would say very expensive, but I was spending money and then I was getting a return. I was getting a return on that investment with coaches and that psychological impact of investing in yourself financially, doing something to financially invest in leveling up you and your business creates this unconscious perception that

you are worth being people spending money on. You are worth being invested in. And it's difficult to go to your clients and try to convince them and make, you feel like they, want them to give you money and invest in you when you won't even invest in yourself. This is a big deal. And so if this is one of the things that not only can we help you with the, the, some of the money mindset, but just by investing or joining a program like Door Grows Mastermind, that's going to...

be a strong signal to you that you have invested in yourself and it puts a little pressure on you that you now need to perform and get a return from this. You've got to take action. And the bigger piece is though is we give you clarity because if you don't have clarity and that's what coaches do they give you clarity which shortens the path to get to the result. Otherwise you're experimenting, you're testing out growth strategies, you're trying different things, you're wasting time, you're wasting money, you're wasting energy.

You're wasting all your different currencies, time, energy, focus, cash, and effort. And so if we can help you collapse time on that, you get to an ROI faster. You get money faster. And it's very easy to offset thousands of dollars a month even in property management. It's very easy. That could be 10 new doors, 20 new doors. And we have some clients doing that on a monthly basis. They're adding doors once they get their engines installed and work with us on growth.

And so it's very easy for us to offset the cost of our program, which is why we're one of the few programs or coaches or vendors in the property management space that doesn't have an annual contract or an annual term or an annual agreement. We're month among. We earn our place. We don't need to get people to sign on the dotted line that they're committed to us for a year and force them to stay with us. Clients stay with us for years.

because we get them an ROI, we make them more money. It's like it's a no brainer and that's what good investments should be. They should give you an ROI. So if you wanna level up your mindset, level up your pricing, make more money, make it easier to work in your business, then reach out to DoorGrow. We can help you out. So I'd like to mention our sponsor for this episode. Speaking of making things easier and better.

So let me tell you a little bit about Blanket. Very cool, very cool client retention platform. So Blanket is a property retention and growth platform that helps property managers stop losing doors. It's not just about what you bring in, it's about what you also keep. So decreasing churn. Add more revenue and increase the number of properties they manage. Wow your clients with a branded investor dashboard.

and an off-market marketplace while your team gets all the tools they need to identify owners at risk of churning. They're thinking about leaving you. It has indicators and powerful systems to help you add more doors. This is something we want all of our clients to use. I think it's a brilliant system and platform. I've hung out with Lior, the CEO, a blanket, really great guy. I believe in their product. think it is something that we're always focused on the front end. We're focused on growth.

but a lot of times we don't focus on the retention, the backend, and even if a client sells a property, Blanket will help you keep that property in your portfolio and get another one of your owners to own that property. That's how it's really a brilliant system, so check it out. Okay, so back to talking about pricing. Any other things we should touch on before wrapping up about pricing that we've been noticing with clients? I think those are the two that stick out to me the most.

And you touched on it, we didn't go too deep into it, was the second one was there's just not enough of a distinguishing factor between two plans or sometimes between all three. Sometimes you look at pricing and you go, so what's the big difference between the lowest plan and the highest plan? And it might be like $50 difference or like a $100 difference. And then you go, okay, why would somebody...

pay $100 less over here to pay the higher percentage. It doesn't make enough sense. So there's not big enough of a difference. Yeah, that's a good point. You brought that up earlier, but we didn't really. Yeah, there needs to be a really strong distinguishing contrast between your cheapest plan, your middle plan, and your premium plan. It needs to be obvious to the, if a cheapo looks at these three, they're like, I want this plan. If a normal,

buyer, which is the majority of the marketplace, like 61 % study say, but maybe two thirds like an in property management, probably even more because the cheapest cheapos self-managed, they don't even will, they won't even work with you. So it's skewed more towards the premium side. And so they, the pre the normal buyers would go towards the middle and then the premium buyers would go towards the premium option. It would be obvious to them. They're like, I want all of this peace of mind. I want all this. And the cheapos are like, I want the cheapest price.

And then you've got in the middle, and we call that the Goldilocks principle. And we have some other principles like the bandwagon principle and some other principles that we teach related to pricing. So you can really understand this and you know how to sell it. That's the other big piece is you got to know how to sell the pricing effectively. And if you have good pricing, you have a really optimized pricing model and you know how to sell it, it actually changes your portfolio. It incentivizes you having better properties.

better owners and less work over the really high operational costs, difficult owners. So it gets you out of what we've talked about many times, the cycle of suck. Where you take on crappy owners, you've got then crappy properties to deal with, which leads to crappy upset, frustrated tenants, which leads to crappy reviews and reputation, which sums up the whole industry. And if you have a crappy reputation and reviews, then you attract more crappy clients and the cycle continues. So this gets you out of the cycle of suck.

and it gets you into a trajectory of having a lot more space, a lot more margin, a lot more ease in your business. And, you know, I'll throw this out there as well. If you have the right growth strategies, you attract less of the cheapos because the wrong growth strategies, internet based, digital marketing based growth strategies leads to the cheapest owners. Those are the people searching on the internet. The best owners are captured earlier in the sales cycle. So reach out to us. We would love to help you with that. All right. So.

In wrapping up if you have ever felt stuck or stagnant or you want to take your property management business to the next level reach out to us at door grow calm also join our free Facebook community just for property management business owners not team members at door grow club calm and if you found this even a little bit helpful don't forget to subscribe and leave us a review we really appreciate it and If you go to door grow calm slash subscribe You can join our newsletter and our emailing list. We would love to have you

join us and get tips, tricks, updates on our product services and offers and the stuff that we can do to help you. And until next time, remember the slowest path to growth is to do it alone. So let's grow together. Bye everyone.

309 episodes

#Business #Jason Hull #Realestate #Rentalhousing #Residentialpropertymanagement #Propertymanagement #Entrepreneur #Marketing #DoorGrow | #1 Property Management Growth Experts with Jason #Sarah Hull #Rentalhome