Flat Fees vs. Performance-Based Fees: Which Property Management Model Is Best?

Choosing the right property management fee structure is one of the most important decisions a short-term rental or Airbnb owner can make. With the wrong pricing model, you could be overpaying or leaving money on the table. Two of the most common pricing structures in the industry are flat fees and performance-based fees—each with its own advantages and drawbacks. While flat fees are widely used, performance-based pricing is still relatively rare. In this guide, we’ll break down both models, highlight what to watch out for, and explain why performance-based pricing is quickly becoming the smarter choice for serious investors.

Flat Fees: Predictable but Potentially Risky

A flat fee model charges a fixed monthly rate for property management services, regardless of how much revenue your property generates. This can seem appealing for budget-conscious owners who want predictable costs.

Pros:

• Budget-Friendly: Costs are fixed, making it easier to forecast expenses.

• Simplicity: Flat-rate billing makes accounting and budgeting straightforward.

• Possible Savings in Peak Seasons: If your property earns significantly more some months, you could save money compared to a performance-based rate.

  
  

Cons:

• No Incentive to Perform: Since managers earn the same regardless of occupancy or guest satisfaction, there’s little motivation to go above and beyond.

• You Take the Risk: If bookings are low, you still owe the full monthly fee.

• Less Adaptability: Flat-fee models often don’t adjust strategies based on performance trends.

Performance-Based Fees: Shared Risk, Shared Reward

With a performance-based model, your property manager earns a percentage of your rental income. If your property does well, they earn more—and if it underperforms, they earn less.

Pros:

• Aligned Incentives: Managers are financially motivated to optimize pricing, guest experience, and occupancy.

• Shared Risk: You don’t pay high fees when revenue is low.

• Accountability: This model rewards performance and penalizes complacency.

Cons:

• Variable Costs: Monthly payments fluctuate based on income.

• Possibly Higher in Peak Months: You may pay more during busy seasons, but ideally, you're also earning more.

Which Model Is Better for Airbnb Owners?

If you value stability and have a high-performing property in a very consistent market, a flat fee might work. But for most owners, especially those entering or growing in the short-term rental space, performance-based pricing offers better long-term results.

Performance-based models align your property manager’s success with yours. They’re not just collecting a check—they’re invested in your outcome.

TruStay’s Performance-Based Management Model

At TruStay, we pioneered a performance-based model because we believe in earning our fee through results—not promises. Here’s how we’re different:

• Performance-Based Fees (15–23%): We don’t take a flat fee just for showing up. We earn more when your property earns more.

• No Long-Term Contracts: You can leave at any time with 30 days’ notice. We earn your business month after month.

• Owner-Focused Reviews: We co-host with you, meaning you always retain control of your guest reviews and property reputation.

• Transparent Owner Portal: Access real-time data on occupancy, revenue, guest reviews, and more.

Still Not Sure Which Model Is Right for You?

Let’s talk. TruStay offers a free rental analysis to help you understand what your property could be earning and what type of management structure best supports your goals.

Schedule your free consultation today and learn how TruStay can help you maximize revenue and minimize stress.