The race to the bottom on strata fees

The race to the bottom on strata fees has been run and won. Here’s 5 opportunities to begin a different race. 

A colleague and I were discussing the race to the bottom for strata management fees at a conference recently. We were in furious agreement that the market for base management fees had hit rock bottom. But then she said something startling.

She told me she’d been the chairperson of a large community title scheme for more than 10 years and not once in that time when the strata management agreement expired had the manager approached her to discuss fees for the renewed term. Not once. In a decade. Each time the contract came up for renewal the manager meekly offered a new contract for the committee’s consideration for the same price as last year. 

Her story got me thinking about the recurring opportunities for fee discussions in the lifecycle of a strata client / manager relationship. I came up with five distinct opportunities to talk about fees and come to better outcome, one where the client says what’s on their mind (in this case my colleague would have liked some different services and been prepared to pay more), and the manager could educate the client about the value they provide.    

Let’s delve a little deeper into each opportunity. 

1. There’s never a better time to talk about your value proposition than before you are appointed. Sending a ‘quote’ in response to an online enquiry without talking is a sure way for strata management to be perceived as a commodity rather than a professional service. 
2. The second opportunity comes when the books and records arrive from the former manager. When wading through them make a lists of all the things that haven’t been done and table this at the first committee meeting.  You’ll look good, much better than the previous manager, and you’ve generated a list of additional services that need to be provided. Talk openly about how much work will be involved to bring things up to scratch and how much this will cost them.
3. Pretty soon in a new relationship something out of scope will arise. That’s something not included in your base management fee. Before embarking on the task, you have a choice – Do I take the required action before signalling this is out of scope? Or do I take a moment to send a quick email to say this is what’s, happened, this is what I’m proposing and this is how much it will cost. This is what professionals do. Moreover, it’s what clients expect professionals to do. If you want to be treated (and paid) like a professional, then act like one. Don’t work for free. 
4. Anniversaries of client appointments are your annual prompt to talk about your fees and service levels. You are probably entitled to an annual CPI increase. These days that’s significant. Don’t miss the opportunity to make the increase but don’t do it without reporting to the committee that you are worth every cent. Spell out what you have done for them in the last year. If you don’t tell, they won’t know. 
5. End of term is of course the big opportunity. It might be one year; it might be three years but get on the front foot and start the discussion at least three months before your agreement is set to expire. Treat it like a new beginning. Be courageous and ask questions about the biggest frustration for the committee. This is your chance to discover a way to solve their problem, and charge accordingly. 

In the coming issues of The Strata Professional we will dig deeper still into these recurring fee discussion opportunity’s and discuss proven techniques that lawyers and other professionals routinely use to satisfy their client’s needs and raise their fees.