From Dead Zone to Growth Zone

How strategic pricing can transform your property management business.

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In property management, pricing is much more than just numbers. It's a direct reflection of the value you bring as a community manager. Yet in South Africa, many property managers find themselves stuck in the "pricing dead zone," where fees don’t match the level of effort and responsibility required to manage communities effectively.

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Let’s unpack how strategic pricing communicates value, explore key pricing models, and discuss why refining your pricing approach is essential for property managers aiming to escape the dead zone and thrive.

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Pricing: Your Unspoken Value Proposition

Pricing isn’t just about covering costs. It's a signal to your clients about the level of service they can expect. Unfortunately, many property managers work tirelessly, navigating compliance, financial workflows, trustee and owner relationship management, and data protection, but fail to communicate the full scope – and value – of their work.

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This can, and has, led clients to undervalue property management services, both in terms of professional respect and rand value. The result has been a growing gap between effort and compensation for community managers.

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Now consider this: our 2024 industry insights reveal that property managers who increased their per-unit rates based on effort saw a 27.5% portfolio growth. Compare that to just 13.8% growth for those who kept their rates lower.

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Clearly, there are circumstances in which clients are willing to pay fair fees. So willing, in fact, that they are flocking to these higher-priced businesses.

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Let’s take a look at how and why this happens, and how you can get on board.

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Key pricing models in Property Management

When it comes to picking a price point, there are three main strategies to choose from, each with its own pros and cons.

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Low-Cost Strategy

This approach is about attracting more clients by offering services at a lower per-unit rate. While this may boost market penetration, it also squeezes profit margins and limits your ability to invest in better service delivery.

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Think of it like Shoprite’s Usave chain: effective for low-cost, high-volume, but hard to sustain at a premium level. Many property managers fall into this trap, attempting to offer – and deliver – a premium service at a cut-price rate, and rapidly realising that the prospect is unsustainable.

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Our Property Management Industry Insight report shows that players in this market typically charge under R90 per unit, per month.

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Premium Pricing Strategy

This approach sets higher fees to reflect the quality and effort behind your service. It attracts clients who value quality over price. These clients, when kept happy, will stick with you longer, allowing for greater profit margins which, in turn, enable you to invest more in service-delivery.

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This is the strategy used by Woolworths or Checkers’ Blue Label, offering exclusivity and exceptional service at a price that reflects that value. Just like these premium brands, property managers who adopt a premium price strategy often see higher client retention and loyalty, thanks to their ability to invest in better staff, tools, and processes.

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Players in this market typically charge upwards of R150 per unit, per month.

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Dead-Zone Pricing

This is less a strategy and more of a default state in which many property managers (who haven’t given much thought to strategic pricing) find themselves. Essentially, it’s the middle ground of pricing where the majority of property management businesses sit.

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Here, competition is fierce, and clients can’t easily distinguish between services. It’s a dangerous place to be, as businesses here tend to focus on price rather than value, making them more susceptible to client loss. Shoprite adopts this type of pricing strategy. As does Pick n Pay. And Checkers. And Spar. And… you get the picture.

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In property management, Dead Zone pricing falls in the R110-R130 per unit, per month bracket.

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Why pricing strategy matters

But why does pricing strategy matter? As long as you have enough clients to pay the bills, you’re winning, right? Wrong.

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As we mentioned earlier, pricing isn’t just about sustaining your business (although that is important). Your price point is also a statement about the value you bring to the table.

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Managers who adopt a premium pricing model are often perceived as offering more value. This perception helps to build trust, loyalty, and stronger client relationships. In contrast, those stuck in the "dead zone" often find themselves in a constant struggle to compete on price alone, which (as we’ve seen in the market) leads to thinner profit margins and strained services. That’s a one-way ticket to burnout.

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The importance of backing up your price point with value

Clearly, there is value in picking a premium price point, and taking advantage of the positive shift in value perception that accompanies that. But it’s important to remember that, at the end of the day, if that value isn’t consistently delivered – in a way that your clients can appreciate – they’re not going to be paying those premium prices for long. (You wouldn’t pay Woolworths prices for a Usave experience, would you?) It’s essential that premium price strategies are backed by a premium service that prioritises the client experience at every touchpoint. That means investing in the right people, the right processes and the right technology to not just elevate your service delivery, but also ensure your value proposition is clear for your clients to see.

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Three ways to elevate your value proposition

How do you help your clients see and appreciate your true value? It’s easy if you focus on the following three things:

• Transparent Reporting: Regularly provide compliance updates, financial data, and operational insights to trustees and directors, making sure they understand the full extent of the work you do. Your monthly reports should cover all key performance indicators of a community.
• Impactful Meetings: Use meetings to reinforce your professionalism and expertise, bringing efficient tools and detailed reports to the table to maximise convenience and enhance your ability to consult and guide confident decision-making.
• Strategic Marketing: Elevate your brand visibility by clearly communicating your unique value through traditional and digital marketing. Be explicit about what sets you apart – tell your story and let your value be visible everywhere.

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Putting your best foot forward

As property management in South Africa evolves, pricing should not just cover operational costs but should also reflect the value clients receive. Stats show that aligning your pricing with the service level you provide leads to faster growth and stronger client retention.

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Next time you review your rates, ask yourself: “Am I communicating the true value of my services?” If not, it might be time for a pricing adjustment. After all, becoming a valuable property manager starts with valuing yourself – and nothing communicates that better than your price tag.