According to the National Multi Housing Council, over 85% of landlords use some sort of property management software, to help automate their business processes.
With over 10 million independent landlords in the USA alone, the market for property management software is huge.
This massive market has created a gold rush of property management software applications, resulting in a variety of pricing models. It’s important to become familiar with these pricing structures so you can choose the best property management software for your needs—without any surprise costs.
Unit-Based Pricing
This structure is based on how many units you own or manage. Software programs using this structure will charge you on a unit-by-unit basis, or when you reach certain thresholds (10 units, 25 units, 50 units, and so on). This type of pricing becomes more significant the larger you grow your business, with each threshold or unit bringing on more costs. Examples of companies that use this pricing structure are Yardi Breeze and Appfolio.
Monthly Subscription
This is the most common pricing layout across all software companies and is seen frequently in the property management software space, as well. In this structure, you are paying a monthly fee to access the platform. These monthly fees can come in different plans, which typically allow you to use more features on the platform. An example of a company utilizing this pricing structure is Buildium.
Feature-Based Pricing
In the property management software niche, this is by far the most widely used pricing plan. This type of pricing setup requires you to pay for specific features you want to use. These features can range from online rent collection, tenant screening, lease signing, customer service, listing syndication, and other critical features. This pricing structure can be a monthly fee, an annual fee, or a one-time fee.
Unfortunately for landlords, this pricing structure is also primarily used by companies with multiple pricing models. This means that when you see this pricing structure, you are most likely going to have to pay multiple ways. Companies that use this type of pricing plan include Buildium, Appfolio, Yardi Breeze, Tenant Cloud, and Avail.
Onboarding & Setup
Another popular cost option you may come across is paid onboarding and setup. In this payment structure, you pay a one-time fee to get access to the platform and additional onboarding help.
Getting setup with property management software can be time consuming. If you aren’t tech savvy, have several units with leases that need to be uploaded, or simply value having your own account representative to help you get started, you should expect to pay these fees. A few companies that have onboarding and setup fees are Buildium, Appfolio, and TenantCloud.
Freemium
This pricing structure is also widely used by SaaS companies and is no different for property management software companies. It’s an easy way for companies to give new users a taste of what the platform is like before making them pay.
This structure can be presented in a couple different ways. The first is through a free trial, where you will get full access to the platform for a limited number of days, before being asked to pay. The other setup is through a feature-light version of the platform. In this layout, you can do basic functions like add a property or tenant for free, but not use the software in its full capacity without paying. Two companies that use this type of pricing structure are TenantCloud and Avail.
Free
One of the least common pricing structures—but by far the best for your bottom line—is the free model. In this structure, you get complete access to the software without having to pay any monthly subscriptions, setup fees, unit fees, feature based fees, or onboarding and setup fees. You get unlimited access to the software for as long as you want it.
How do they make money? In this structure, you will commonly see minimal fees spread out to tenants. These fees may include the cost of running a screening report when they apply for a rental or small convenience fees for purchasing renter’s insurance or paying rent online each month. These fees are insignificant on an individual level, but when added up across thousands of tenants, they provide a great stream of revenue for the software provider.
Choosing the Platform that Meets Your Needs
With a wide variety of options to choose from, it is important to select the software that best meets your needs, both in terms of features and pricing structure. Decide which type of pricing structure is ideal for you before you begin your research and start testing software. Be familiar with the other pricing structures, so you can easily identify them when you are looking into options. This will save you time and money as you dive deeper into your process.
