If I had a dollar for every time a BTR operator asked me why Price Wizard doesn’t simply recommend rents based on neighbouring buildings, I’d probably have enough to buy one of those buildings myself. The question comes up so often that I’ve started to wonder if there’s a secret BTR operators’ handbook somewhere with “Copy thy competitor’s pricing” written in bold letters on page one.
Here’s the thing: this approach is not just suboptimal – it’s pricing malpractice.
The Illusion of Following the Leader
Let me paint you a picture. Imagine you’re at a restaurant, and instead of looking at the menu, you simply order whatever the person at the next table is having. You might get lucky and enjoy your meal. Or you might discover that person ordered the spiciest curry on the menu and you can’t handle heat. Either way, you’ve abdicated one of your most fundamental choices based on incomplete information about someone else’s preferences
BTR pricing works the same way, except the stakes are considerably higher than a potentially uncomfortable dinner.
The Ten Commandments of Why This Doesn’t Work
1. The Marketing Mirage Your competitors probably aren’t showing you their real pricing schedule. They’re displaying their cheapest apartments like loss leaders at a supermarket – designed to get people through the door, not to represent the true cost of shopping there. Once prospective tenants arrive, the upselling begins. You’re basing your strategy on their marketing tactics, not their revenue optimization.
2. The Attribution Problem Even if you somehow obtained their complete pricing schedule (which would raise some interesting legal questions), you still wouldn’t know the attributes of each apartment. That “bargain” 2-bedroom might be facing a construction site, have no natural light, or be located next to the garbage chute. Context is everything in real estate pricing.
3. Value is in the Eye of the Beholder Tenants will value buildings differently, and these differences are often subtle but significant. Maybe your building has better soundproofing. Perhaps their building has a slightly better gym but yours has superior lighting. Maybe your concierge actually knows tenants’ names. These intangibles drive value, and they’re impossible to capture by simply copying prices.
4. The Blind Leading the Blind Here’s a radical thought: What if your competitor has no idea what they’re doing? What if they’re making the same pricing mistakes we see across the industry – charging too little for corner apartments, not optimizing for lease terms, or using a pricing model last updated in 2019? Congratulations, you’re now making their mistakes too.
5. Outsourcing Your Competitive Advantage Pricing is a core business lever – arguably the core lever for revenue optimization. When you follow your competitor’s pricing, you’re essentially outsourcing this critical function to them. That’s like letting your competitor choose your marketing strategy or hire your staff. Would you do that?
6. Different Objectives, Different Strategies Not all BTR operators share the same goals. You might be focused on maximizing revenue over 24 months, while your neighbour is desperately trying to hit a 95% occupancy rate to satisfy a loan covenant. Their pricing strategy serves their objectives, not yours. Following their lead could actually take you further from your own goals.
7. The Renewal Rate Ripple Effect Every building has different tenant retention patterns. If your competitor has poor retention (perhaps due to service issues), they might be pricing new leases aggressively low to compensate for high turnover. If you have strong retention, you can afford to price higher for new tenants. Their problem becomes your missed opportunity.
8. Different Life Stages Buildings are like people – they have different needs at different stages of life. A building in lease-up phase faces different dynamics than one that’s been stabilised for five years. Copying the pricing of a building in a different lifecycle stage is like a teenager trying to follow a retiree’s exercise routine – it just doesn’t fit.
9. The Collective Blind Spot When everyone watches everyone else, nobody watches the market. I’ve seen entire submarkets where all operators kept lowering prices in lockstep, even as demand was increasing and they should have been raising rents. It’s like a room full of people all looking at each other instead of looking out the window to see what’s actually happening outside.
10. Legal Complications In the United States, competition regulators have taken action against BTR operators for what they see as pricing coordination. Following your competitors too closely can put you in legally murky waters. Better to avoid the problem entirely.
The Treasure Map You’re Ignoring
While you’re busy trying to decode your competitor’s strategy, you’re sitting on a goldmine of data from your own building. You know:
- Which tenants signed new leases and what they were willing to pay
- How long apartments sat vacant and what asking rents prospects rejected
- Which tenants renewed, what increases they accepted, and their tenure patterns
- Which tenants didn’t renew and what rent increases drove them away
- The precise attributes of every apartment and how they affect desirability
This data tells the story of what your tenants value, what your market will bear, and what your optimal pricing strategy should be. It’s personalised, real-time, and actionable. Why would you ignore this treasure trove to chase shadows of your competitor’s strategy?
Market Intelligence vs. Market Following
This doesn’t mean market data is useless. Understanding broader market trends, knowing what’s happening in your submarket, and being aware of major competitive moves all have value. But this information should be an overlay on your internal data, not a replacement for it.
Think of market data like the weather forecast – useful for planning, but you wouldn’t dress based solely on what your neighbour is wearing.
The Leaders vs. The Followers
The best operators I’ve worked with treat their data as a strategic weapon. They dive deep into their tenant behaviour patterns, experiment with pricing strategies, and continuously refine their approach based on results. They use market intelligence to inform their decisions, not to make them.
The followers, meanwhile, are always one step behind, reacting to moves they don’t fully understand, based on incomplete information about situations that may not apply to their buildings.
Which Are You?
So here’s my question for you: Are you an industry leader or an industry follower? Are you making pricing decisions based on comprehensive analysis of your own performance data, or are you playing a game of Chinese Whispers with your competitors?
The choice is yours. But remember – in a world where everyone follows everyone else, the real winners are those who have the courage to chart their own course.
If you’d like to discuss how to transform your data into a competitive advantage, rather than following someone else’s breadcrumbs, get in touch. After all, the best pricing strategies aren’t copied – they’re created.
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Greg Einfeld is the Founder and CEO of Price Wizard, helping BTR operators worldwide optimise their pricing strategies through data-driven approaches.
