Why SaaS Models Don’t Work in the Rental Market

This might not be the most popular opinion, but SaaS models really suck. Now, that’s not to say SaaS models can’t work really well in many industries, but they’ve simply taken advantage of the rental market. As the requirement for more services naturally increases over time, rental management SaaS companies don’t have a meaningful answer except to charge more per-door.

SaaS, otherwise known as “Software-as-a-Service,” is a way for a provider of a software service to measure usage, typically on a monthly basis, giving their client a unit of measurement to benchmark their software-spend off of. For the rental market, SaaS has become a counterintuitive way for property management software to charge their property management clients.

Here’s why it doesn’t work:

Unlike a cloud provider or data company who is able to measure and charge for “actual usage,” SaaS property management software companies instead began to use a metric that lacks understanding of the market and charges fees without accuracy. Property managers are fee-based, meaning they make a fee off of the revenues they are able to generate through the operations of a property. If a unit is vacant, they don’t make money off of that unit. In fact, they pay to have it marketed and for their team to help fill the vacancy. The problem with SaaS today is that they latched onto the the easiest and most static metric they could use to charge for use of their software, the number of units under management. Regardless if those units are filled or not.

Herein lies the massive misalignment. This is the reason we say, “Don’t SaaS me!” These Property Management Software Companies will charge a per-door, per-month fee, regardless of a transaction taking place or the volume of transactions per-door. Understandably, Property Managers have become a little numb to SaaS fees. However, as the Property Management Company wants to grow, so does the SaaS fee.

Target markets, revenue objectives, and the product or service’s marketing strategy influences the prices. If the Property Management Company wants to innovate and add more value, they’re at the mercy of the property management software company, and very likely, the SaaS fee will increase with each request or service added. Typically, this doesn’t mean a clean feature that is easy to use, or very pretty for that matter. It’s a bolt-on service designed to be a band aid to cover missed ques and new market demands. Property Management Software has created a walled garden and remains inflexible to new value-add services they can’t make money off of.

This is the opposite of what the mass market needs today. New value is being created outside that walled garden in shorter duration opportunities, on-demand or direct-to-consumer services, and features that offer upward mobility and revenue opportunities. Leasera is breaking the old mold, killing the idea of SaaS, allowing for simplicity of scale for Property Management Companies, and building a stronger consumer solution that changes what it means to rent in today’s market.

We’re cultivating a new era of leasing and rental property management to serve a demographic that is shifting quickly and dramatically. There’s roughly 50% more revenue circulating around the long term rental market as a new era of renting emerges. The renter demographic is more dynamic, therefore requiring a more dynamic network to serve its needs. Sure, we could charge for every little feature and service we provide, but then we’re providing minimal and incremental improvements when instead, we can change what it means to be part of a new market all together. In our market, SaaS isn’t necessary if you provide greater value. And that’s exactly what we aim to do.

Though, it is difficult to remain dedicated to this model. And for many, the temptation to charge property managers the traditional per-door fee is high. Instead, Leasera saw a new process and opportunity to create a loved brand, known not just to the industry, but to the consumer that helps drive this industry forward. We don’t charge SaaS, we drive value that increases reasons for people to transact with us. This means that along the cycle, consumers are left with value in the end. They’re left with a reason to be proud of their status as a renter and consumer, and proud of their ability to grow, build, and enjoy the access of a unified rental market.

Leasera’s Results

Everyone benefits from a more virtuous ecosystem within Leasera. An ecosystem where Property Management supports the consumer, the consumer supports the service group, the services group supports property management, and around, and around the flywheel goes.

Leasera’s Network Flywheel

In the rental market, SaaS is an over-simplified model that measures the number of doors you manage, not what’s behind it. Like whether or not it’s vacant, where in the region it’s operating, or if the margins of the operation took a hit that year. Yesterday’s SaaS based property management software doesn’t care. They happily take their cut, regardless of their client’s success or failure.

Plus, there’s currently no loyalty offerings to speak of in spite of other industries thriving off such opportunities. Services that cover consumer demands like: smart access technology to manage leasing activities, food and grocery delivery, community engagement, access to service providers they use every day anyway, and more. It isn’t just about being a renter who simply wants to keep a roof over their head with nothing to show for it in the end. Today’s renter demographic is full of active consumers engaging in markets they see innovative loyalty offerings, access, and support, every day.

Companies that figure out these features retain up to 70% more of their customers. Services like short-term duration leasing, management solutions for different property types, and professional services from the on-demand market that consumers use every single day, were all simply just an afterthought at best. If property managers want to offer smart access solutions, SaaS based property management software companies hold the lock and the key. Every time a new feature becomes available, it’s sanitized so heavily that the value is no longer present, and the cost per unit on the SaaS fee increases, bringing any meaningful ROI. All of this makes scaling near impossible.

But with Leasera, it’s not only possible, it’s our priority. Leasera provides the opportunity to increase efficiency and scale, without increasing overhead. With Leasera’s unified platform, there’s an opportunity to start offering greater value than any SaaS model ever could.

Welcome to the new era, and a new life on leasing.

Leasera’s New Era of Renting

by Barret Newberry, CEO Leasera

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