How to Price a Multi-Property Agreement
Why this matters
A manager with a portfolio asks for a portfolio rate, and the number they name always sounds reasonable next to the volume they are promising. The trap is that volume is not the thing that lowers your cost. Density is. Predictability is. Fast access is. A portfolio can hand you all the volume in your market and still cost you more per billable hour than the residential work it displaced, because every unit is occupied, every entry needs coordination, and one site is on the wrong side of town. Price the agreement against what actually changes your cost per day, and the concession you give will be one you can survive.
Step 1: Get twelve months of history before you quote
Ask for the prior year's work-order export for every property in scope: count of demand calls, count of make-ready or turnover jobs, and the scheduled maintenance already contracted. Ask separately for the door count and site count, and for the age of the major systems.
You are looking for the demand rate per door, because that is the number that tells you what a year of this account actually looks like. A manager who cannot produce the history is telling you something too, and the correct response is to price the first term at standard rates and re-open after you have built your own history.
Skip this and you are pricing a guess. The commonest way to lose money on a portfolio is to discount for a call volume that never materializes, or to discount into a volume far higher than anyone described.
Step 2: Split the portfolio into three revenue streams and price them separately
They behave differently and blending them hides the loss.
- Scheduled maintenance. Predictable, routable, and the only stream you can plan a technician-day around. It is worth a real concession because you can fill dead time with it.
- Demand repair. Unpredictable arrival, a response obligation attached, and it breaks whatever route you had. It is the stream that costs you the most and the one managers most want discounted.
- Turnover and make-ready. Batched, vacant, no tenant coordination, often several units at once. Structurally your cheapest hour on the whole account, and the one where a concession costs you least.
Quote three rate lines, not one. A single blended rate means the cheap stream subsidizes the expensive one, and if the mix shifts toward demand work in year two, which it usually does as systems age, your blended rate silently goes underwater.
Step 3: Price the response obligation, not just the hour
Managers negotiate the rate and then insert a response window in the agreement, and the window is where the cost lives. A four-hour response obligation on demand calls means a technician has to be interruptible, which means you cannot fully commit that technician's day, which means the billable hours you get out of them fall.
Price the response window as its own line: a standard response is the base rate, a same-day or four-hour obligation carries a premium, and after-hours carries its own. If a manager wants a tight window at the base rate, the honest answer is that you can hold the rate or the window, not both.
Step 4: Measure drive and access separately, because they behave differently
Both are unbilled and shops lump them together. They should not be.
Drive time falls with density and you can fix it with routing. Access wait does not fall with density at all. It is the time between arriving and being able to start: reaching a tenant, waiting for a key, being met by a manager, finding out the unit is occupied by someone who did not know you were coming. On occupied multifamily it is materially larger than on residential and it is roughly constant per call regardless of how tight your route is.
Sample it before you commit. Have techs log arrival time and start time on twenty calls at the portfolio's properties. You will get a per-call access figure, and it is the number that decides whether density is going to pay for the concession or not.
Skip this and you will attribute the whole gain to density, discount against it, and never find out where it went.
Step 5: Fund every concession with a named cost reduction
Write this rule into how you quote: a concession is earned by something that lowers your cost per billable hour, never by portfolio size alone. There are exactly four things a manager can give you that qualify.
| What they give | Why it lowers your cost | What to write into the agreement |
|---|---|---|
| Density (sites close together) | Shorter hops, more calls per day | The portfolio rate applies only to sites inside the block; define the block by drive minutes |
| Batching (turnovers grouped, PM on fixed days) | Full days you can plan | A minimum batch size, or the batch rate reverts to standard |
| Access (lockbox, key control, vacant-first scheduling) | Cuts access wait, the cost density cannot touch | A stated access method per property |
| Payment speed (a shorter actual cycle) | Releases working capital | Terms plus what happens when the actual cycle exceeds them |
If the manager cannot give you any of the four, the honest position is standard rates with a volume review at twelve months. That is not a hard conversation if you explain which of the four you are looking for.
Step 6: Define the block, and put the outliers outside it
Density only exists if the sites can be worked as a block. Set an explicit geographic test: a site earns the portfolio rate only if it sits within a stated drive time of another site on the same agreement. Fifteen minutes is a reasonable starting point in a mixed suburban market; tighten it in a dense urban core and loosen it where everything is a highway apart, but state a number.
Sites outside the block bill at your standard rate plus the actual trip. This is not punitive and managers accept it readily when it is framed as what it is: the far site cannot be routed with the others, so it does not generate the saving that funds the discount.
Step 7: Set the term, the escalation, and the re-open
Twelve months with a termination-for-convenience notice on both sides is the normal shape and it is fine. What matters more than the length is what triggers a re-price.
- Annual escalation. State it as a percentage or tie it to a published index, and state it in the agreement rather than raising it later as a surprise.
- Composition re-open. If the portfolio changes by more than about 20% of doors in either direction, either party can re-open the rate. Growth without a re-open means you have discounted for a density you no longer have, and shrinkage is worse.
- Concession sunset. The portfolio rate applies while at least a stated number of sites remain on the agreement. When density leaves, the discount leaves with it, on notice.
Worked example: what a 12% ask actually costs
Four sites, 118 doors: 48, 32, 26, and 12. Prior year: 214 demand work orders, 96 turnovers, and eight scheduled visits. Three of the four sites are within 12 minutes of each other and carry 106 doors, which is 90% of the portfolio. The fourth, 41 minutes out, carries the remaining 12 doors.
Your current residential mix runs 5.6 billable hours out of an 8.0-hour technician-day, which is 70%. The manager asks for 12% off your standard rate across the portfolio.
What 12% requires. To hold revenue per technician-day at a 12% lower rate, billable hours have to rise by 12/88, which is 13.6%. That takes you from 5.6 to 6.4 billable hours per day, or 80% of an 8.0-hour day. That is the bar. Everything after this is whether the portfolio clears it.
The density gain. Working the three clustered sites as a block drops the hop between calls from about 25 minutes on your normal cross-town routing to about 12 minutes. That saves 13 minutes per call, and at five calls a day it is 65 minutes, roughly 1.1 hours. Density alone takes you from 5.6 to 6.7 billable hours. So far the 12% looks funded.
The access cost. Then you look at the twenty sampled calls from step 4. Access wait on occupied units at these properties averaged 14 minutes against 3 minutes on your residential work, an added 11 minutes per call. At five calls a day that is 55 minutes, roughly 0.9 hours. Subtract it: 6.7 minus 0.9 is 5.8 billable hours per day.
The verdict. The portfolio delivers 5.8 billable hours per technician-day against 5.6 on your current mix, a real improvement of 0.2 hours. It does not deliver 6.4. The revenue-neutral concession is the one where 5.8 hours at the reduced rate equals 5.6 hours at standard: the reduced rate is 5.6 divided by 5.8, or 96.6% of standard, which is a concession of about 3.4%. Round it to 3%.
So the honest counter is 3%, not 12%, and the reason is a single line you can say out loud: the density is real and worth about 1.1 hours a day, and the access coordination costs about 0.9 of it back. That is a conversation about their access process, which they can fix, rather than about your rate, which they cannot.
The outlier site. The fourth site holds 10% of the doors and cannot ride the block. Its calls carry the full 41-minute approach. It goes outside the block definition from step 6, at standard rate plus trip, or it gets batched to one fixed day a month.
The payment lever. The demand stream is 214 work orders a year averaging 2.1 billable hours, so about 449 billable hours annually. At a 45-day actual payment cycle you are permanently carrying 449 times 45/365, about 55 billable hours of delivered work that is not yet paid. At 20 days it is about 25 hours. Moving the cycle releases roughly 30 billable hours of working capital, and it costs the manager process rather than money, which is exactly the kind of concession they can actually grant. Trade for it before you trade rate.
How to verify the agreement is holding
Three checks at the end of the first quarter, on the portfolio alone rather than blended with everything else.
Billable hours per technician-day on portfolio days. You predicted 5.8. If it comes in below 5.6, the agreement is worse than the work it displaced and you re-open on the composition clause, not at renewal.
Access wait against the sample. If the sampled 14 minutes has crept to 20, the access concession from step 5 was never actually implemented, and that is a specific, fixable conversation with a specific number attached.
Stream mix against the quote. Recount the three streams. If demand repair has grown as a share while turnover has shrunk, your blended economics have moved even though every individual rate line is unchanged. That is the drift that kills portfolio agreements in year two, and it is invisible unless you recount.
References
- Standard vendor service agreements used by third-party property managers, which typically set response windows, rate schedules, and termination notice
- See related: The Portfolio That Looked Profitable Until the Drive Time Landed, The Payment Cycle You Do Not Control
- See related: How to Get Paid on a Net Cycle Without Financing Your Customer, Qualifying a Commercial Customer Before You Commit a Crew