How Standardized Pricing Can Help Alleviate Unforeseen Maintenance Costs

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Effective maintenance management can begin where the buck stops. Negotiating standardized pricing with qualified vendors will take the guesswork out of maintenance costs on jobs big or small.

Repairs, maintenance and installs on components of any home can be expensive and time-consuming. For a property manager, maintaining consistent pricing for the same services over multiple vendors is a smart way to do business. The problem is, if no standardized pricing has been established with vendors, the property manager may get charged different amounts.

Having standardized pricing allows a property manager to work in a much more structured, methodical way and keep costs from getting out of line.

Strive for standardized pricing

Think of going to the local diner that you frequent and paying a different price each time for that meat loaf platter. Doesn’t usually happen, does it? The restaurant maintains the menu price so that customers have an expectation of what their lunch or dinner is going to cost each time.

The same goes for maintenance work. An annual system check on a 14-seer air-conditioning system in November should cost the same as it would in May from the same vendor, a standardized pricing agreement is in place. If the property is not paying attention, the price could be different – usually higher.

To establish standardized pricing, find vendors who are willing to work with your company at an agreed upon rate, no matter the time of the year and whether it’s for lawn mowing or buying toilets. Changing market conditions affect costs of goods, and having a pricing agreement in place will often protect the property.

Use data intelligence in your negotiations

Once vendors have been identified, it’s time to go shopping. But do your due diligence. This may require looking at rates over the past two or three years.

Data intelligence can help determine what it is that you’re going to negotiate, especially when working within a large portfolio. Identifying costs for previous work gives you a basis for bargaining with the vendor. But equally important is communicating whatever prices are negotiated to other properties or management groups within the portfolio.

“If you’re not looking at data, then you’re not able to do this,” says RealPage Vice President Supplier Management Jennifer Lester. “You need to be able to look at your data to be able to determine what it is that you’re going to negotiate, how you’re going to fine tune your process and how you’re going to communicate that information out to your team to make sure they’re following what you’ve put into place and how you’re going to drive compliance.”

When dealing with a large vendor, pricing agreements may not get communicated to all of its locations, especially if multiple stores are involved. Thus, if property managers in other states know the pricing, they are less likely to get charged another rate from a store that isn’t informed.

“You may be dealing with a big company that has hundreds of stores, and the message may not get to every store,” Lester says. “If it does, maybe that store manager is busy and didn’t get to enter that particular price in the system, and again, you’re still paying different prices.”

Establish a two-way street with vendors

Standardized pricing becomes a benefit for the property and vendor, says RealPage Vice President James Wagley, who specializes in maintenance processes. The benefit for the vendor is knowing that your property is going to send future business. What the property has to gain is a steady rate.

“You’ll have to get the buy-in from the vendor,” he said. “What you’re saying is that as long you’re available and you perform, we’re going to give you as much toilet replacement work as we can. In turn, you’ll give me a commitment that we’re going to get this price.”

That commitment lets the vendor know that the property management company is serious about the relationship and that the vendor should be equally resolute.

But Wagley says there is more than just dollar and cents to hammering out a good deal. It’s giving vendors prompt, courteous attention when it’s time for them to get paid. Communicating with vendors your company’s invoicing process and establishing terms and consistent payment will enhance business dealings.

“You need to consider invoicing and how often the vendors will get paid,” Wagley said. “That can affect price, cooperation, morale, a lot of things. It can affect how much vendors want to work for you.”

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