x
By using this website, you agree to our use of cookies to enhance your experience.
award
award award
award award

TODAY'S OTHER NEWS

Purplebricks testing four different pricing strategies in 2020

Purplebricks says it’s put four different pricing strategies into the market with a view to testing them in 2020.

In a trading statement this morning it reveals the initiative, saying: “An in-depth pricing exercise was conducted ... to answer three fundamental questions:

- How much headroom do we have in our pricing?

- Can we increase our addressable market by evolving our pricing structure?

- Can we better incentivise our population of Local Property Experts to improve customer outcomes?

“The pricing exercise saw the deployment of four different pricing methods into the market to gather data and as a result, a series of in-field tests will be conducted in early 2020 that will examine different pricing strategies, with some reducing the level of up-front fee and splitting the payment between publication and completion … In the meantime, on 24 October management increased UK prices by £100 nationwide, honouring any earlier valuations for 30 days. The business' pricing remains favourable to a typical industry commission level of 1.2% plus VAT.”

Meanwhile the rest of the trading statement is given over to figures from the agency's activities in the six months to the end of October. 

Purplebricks' revenue was £64.8m - some 73 per cent came from its UK operations and the rest from Canada. Losses for the period were £14.1m - much of that said to be down to the closure costs for the agency's disastrous Australian and US adventures. 

Purplebricks claims its UK listings market share is 4.1 per cent and - more controversially - it claims its share of completions is 5.3 per cent. It puts brand awareness in the UK at 97 per cent.

The agency's only surviving international activities - in Canada - are described in the statement like this: "The Canadian business modestly outperformed expectations, with strong growth in Alberta, Manitoba and Ontario ('English Canada')."

Vic Darvey - who took over as chief executive of Purplebricks when Michael Bruce was removed in May - says: “We are very pleased with the progress made in the period in light of the market backdrop. We’ve seen resilient trading in the first half, with our diverse revenue streams and strong ARPI growth improving the quality of earnings and balancing out declining market conditions. We end the first half having now stabilised the business and the significant losses incurred last year have now been reversed with the group enjoying profitable trading. Our focus on operational excellence and improvements in our technology-led proposition, along with proactive management of our pricing structure will enable us to continue to achieve profitable growth. We remain confident of meeting our medium-term objective to gain a 10 per cent share of the UK market.”

  • Chris Arnold

    Despite the fee level being placed fourth on customer requirement surveys!

  • Andrew Stanton Proptech Real Estate Strategist

    Not a good picture for Purplebricks, despite hiking the fee by £100 a unit, they did 47M of revenue in 6 months in the UK - bearing in mind they charge an upfront fee at around £1,300 sale or no sale, and only turned in a profit of 3.5M, down almost 40% in terms of profit for the same period last year.

    With further monies still required to pay for their global exploits that will fall in the next accounting period, I think the full trading year will show inroads into the cash war chest that once stood not so long ago at 150M, then dropped in a year to 60M and now must be dwindling fast.

    Also, if they change their fee model, to a more fees payable on completion, this will skew their cash flow by five months, typical cycle of a completed property, so rather than easing the cash situation it may well compound it.

    No point in being the biggest lister of property in the UK if you have no cash to run the operation. Going into its 5th year this should be a maturing model, for me it is well past its sell by date, as its offering is in no way spectacular, its just a cheap fee - reflected in service levels, which appeals to a small segment of vendors, selling at the lower end of the property scale.

  • icon

    I think, finally, even they're realised they haven't got a clue what they are doing.

    icon

    What are you talking about Property Cuntit??

     
  • icon

    Hey Michelle Lockwood! In the inimitable words of Louis Walsh; 'You remind me a young Edna the Inebriate Woman'. Maybe not so young here though, eh?

icon

Please login to comment

Zero Deposit Zero Deposit Zero Deposit
sign up