I wrote a post a while back asking for input on my pricing. My idea in that post was to find a price that everyone could like, from large to small property managers. The winner of that poll was the highest price. This partially due to my competitors voting on the highest price - it is in their best interest to keep the price high.
I did get some feedback on this post and one person mentioned that if I lower my price too far people will not respect my site because they will think of it as a cheap.
One of the things I want to do is offer a fair price to everyone while not looking cheap, so I came up with the idea of volume pricing as shown in the graph above.
If you just post one rental it will cost you $38. Each time you add another listing you get a discount price based off the last listing price. As you can see it gets cheaper and cheaper as you purchase more listings.
A 3% discount is provide for each additional listing. So instead of paying $3,800 for 100 listings a property manager would pay $1,237.
I am looking for feedback on this issue - what does everyone think?
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4 users responded in this post
Dave,
Right now this industry is in a free-for-all state when comes to pricing - and nobody has the right number yet.
Unfortunately you have a perceived value of a Web site compared to the actual value of a Web site, both of which are currently being dictated by the market (aka property managers).
What do I mean by that?
First let’s look at Actual Value. What value does your Web site site offer to the Property Manager?
1. Basic Ad Features ie. Printable Flyers, Maps, Email Listing, Unlimited Photos, Virtual Tours, Amenities, etc.
2. Reporting - are you sending out weekly/monthly lead reports to the Manager so they can calculate their ROI?
3. What about a Toll Free trackable phone number so managers know where the lead is coming from?
4. Marketing - SEO/SEM is definitely a key, but how else are renters going to find you? Are renters able to find you offline so when they do research online later, they know exactly where to go?
Those are just a couple of the features that go in to the Actual Value of a Web site. Not to mention the Golden Question of ‘How many leases were converted?’
As we are still in the 2nd or 3rd inning of this ballgame, RentalHouses and HomeRentalAds kind of got the phone ringing and some emails in the Inbox at an All-U-Can-Eat pricing of $99 Unlimited. Which has created a skewed perceived value of pennies per ad.
With that being said, based on the pricing structure you have printed above, do you think you could grow a profitable business? It seems that after ad #100-and-something the listings will be free. Keep in mind you have to pay for all of the operating expenses: Marketing, Salaries, Offices, Equipment,etc. (not to mention NARPM Sponsorships/Luncheons).
Basically I am saying this, if the best part of your product is the price - shouldn’t that tell you something about what you are selling. Anybody can duplicate price, but the real difference is in the quality and service you provide.
InTheIndustry,
Wow, thanks for the informative feedback on my post.
Sounds like you have a lot of experience when it comes to price structuring.
My business plan is pretty simple, do everything myself and not hire or outsource. You referred to operating expenses, as you can imagine my expenses are probably the lowest in the industry.
The only reason for me to provide a volume discount is to fit with in my business plan by doing everything myself.
I need all the ways I can to automate my business. I am assuming once I get the traffic and I out rank my competition I will be getting calls and emails everyday from property managers asking for a discount.
To stay within my business plan I need to cut those emails in calls down to nothing so I can get other work done.
But I could be making a mistake, perhaps my assumption that property managers will be calling me for discounts is overblown.
[...] while back I wrote a post on an idea I had for a volume discount. The volume discount was based on a sliding scale (see the graph in previous post), the more you [...]
[...] have some code work to do, but I hope to have my automated volume discount in place before RentalHouses discount [...]
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