The letter arrives 90 days before your elevator contract renews. Your service provider is raising your rate 18%. The current contract is $14,000 annually. The new one is $16,520. Your building hasn't gotten better service. The equipment is the same. But now you're getting a $2,520 bill increase with three months to decide.
This is the position most property managers face at least once. Here's how to handle it without getting cornered.
Why Price Increases Happen
Elevator companies raise prices for four reasons:
Labor costs rise. Union contracts include annual wage increases. A mechanic making $45/hour in 2024 costs $47/hour in 2026. That's a 4.4% jump in two years. If labor is 70% of your contract cost, that alone drives a 3% increase.
Parts get expensive. Supply chain disruptions hit elevator parts hard. A controller board that cost $1,800 in 2023 now runs $2,400. Lead times that were 6 weeks are now 14 weeks. Service companies stockpile inventory to avoid downtime, and they pass that carrying cost to you.
Insurance premiums climb. Elevator service companies carry $5M-$10M in liability coverage. Premiums rose 15-25% industry-wide between 2024-2026. That cost flows into contract pricing.
CPI clauses activate. Many contracts include Consumer Price Index escalators. If your contract has a 3% annual CPI cap and inflation ran 4%, your provider deferred that 1% gap. At renewal, they recapture it. That deferred increase stacks with the new cycle's adjustment.
Some of these reasons are legitimate. Some are profit margin protection disguised as cost recovery. Your job is to figure out which category your increase falls into.
What's a Reasonable Increase
Industry standard: 5-7% annually for contracts without major scope changes. This covers typical cost inflation without padding margins.
If you're seeing:
- 3-4%: Fair deal. Likely cost-of-living only.
- 5-7%: Standard. Check that service quality matches the increase.
- 8-10%: Aggressive but defensible if they can document cost drivers.
- 11-15%: Borderline predatory unless your building had major service issues requiring extra coverage.
- 16%+: You're subsidizing their other buildings. Time to negotiate hard or walk.
An 18% jump means one of three things:
- Your original contract was underpriced and they're correcting it.
- They don't want your account anymore and priced it to push you out.
- They think you won't shop around, so they're testing your threshold.
Your 90-Day Negotiation Playbook
Days 1-30: Gather Data
Pull your service history. How many callbacks did you file? How fast did they respond? Any repeat failures? If you had six callbacks in 90 days and they want 18% more, that's leverage.
Check your current contract terms. Is it full maintenance or exam-only? What's excluded? Does it cover modernization parts or just service labor? Run your contract through a scanner tool to identify gaps.
Get two competitive bids. Call two local elevator companies. Tell them you're reviewing your current contract and want a quote for equivalent coverage. You don't need to commit—you need numbers for comparison.
Document equipment condition. If your elevators are 15+ years old and running obsolete equipment, that's a factor. Older systems cost more to service because parts are harder to source. If that's your situation, the increase might be justified.
Days 30-60: Negotiate
Present your data. Schedule a call with your account manager. Say: "We've been with you for X years. Our service history shows Y callbacks with Z average response time. Your proposed increase is 18%, which is 2-3x the industry standard. Walk me through the cost breakdown."
Ask for documentation. Request a line-item explanation of the increase. Labor? Parts? Insurance? Overhead? If they can't provide specifics, they're guessing or padding.
Propose a multi-year lock. Offer to sign a 3-year contract at a lower increase—say 10% in year one, then 3% annually for years 2-3. This gives them revenue stability and you budget predictability.
Offer scope reductions. If they won't budge on price, reduce scope. Move from full maintenance to examination-only. Keep preventive maintenance, drop break-fix coverage. You self-insure for repairs and save 30-40% on the contract.
Use competitive bids as leverage. Don't bluff. If you got quotes from two other companies, show them. Say: "Company B quoted $13,200 for equivalent coverage. You're at $16,520. I'd rather stay with you for continuity, but I need you closer to $14,500."
Days 60-90: Decide
You have three options:
Option 1: Accept the increase. Do this if:
- Their service has been excellent (sub-2-hour response, minimal repeat failures).
- Competitive bids came in higher or equal.
- Switching costs (new vendor onboarding, tenant disruption) outweigh the savings.
Option 2: Negotiate a compromise. Split the difference. Accept 10-12% if they meet you halfway and lock it in for 2-3 years.
Option 3: Walk. Switch providers if:
- They refuse to justify the increase or provide cost breakdowns.
- Competitive bids are 15%+ lower for equal scope.
- Service quality has declined (slow response, repeat issues, poor communication).
- You sense they're pricing you out intentionally.
Walk-Away Indicators
Sometimes the best negotiation tactic is leaving. Walk if you see these red flags:
They won't negotiate. If they say "This is the price, take it or leave it" without discussing options, they don't value your business.
Service quality dropped. If callbacks increased, response times slipped, or they're regularly sending less experienced techs, you're paying more for worse service.
They can't explain the increase. Vague answers like "costs went up across the board" or "industry-wide adjustments" mean they didn't do the math—they're testing what you'll tolerate.
Your building is too small for them. If you're a 2-elevator building and they've shifted focus to large commercial portfolios, you're a deprioritized account. You'll get better service from a smaller, local contractor.
Your 90-Day Action Checklist
90 Days Out:
- Pull service history (callbacks, response times, repeat issues)
- Review current contract scope and exclusions
- Identify equipment age and obsolescence risk
60 Days Out:
- Request two competitive bids for equivalent coverage
- Schedule negotiation call with current provider
- Prepare questions: cost breakdown, service improvements, multi-year options
30 Days Out:
- Present competitive bids and service data
- Propose multi-year lock or scope reduction
- Set deadline for final decision
Decision Day:
- Accept if justified and service is strong
- Negotiate if they'll meet halfway
- Walk if they won't budge or service declined
What to Do Before Renewal Season
Don't wait for the price increase letter. Check your elevator maintenance contract costs annually. Track your service metrics. Know what you're paying versus market rate. Property managers who audit their contracts proactively have leverage. Those who react to renewal letters get cornered.
If you're inside 90 days and staring at an 18% increase, you're not powerless. You have data, you have options, and you have time. Use all three.
Before you negotiate: Scan your current contract to see what you're actually covered for. Most property managers discover they're paying for "full maintenance" with 15+ exclusions. Know your baseline before you argue over the increase.
Answer 15 questions and get an instant risk score for your elevator service agreement.