Purplebricks says changes to its fees structure - possibly becoming less reliant on controversial upfront charges - has been delayed until the autumn.
A statement to shareholders this morning says: “We have a business model that is based on value. It's unrivalled in the marketplace and offers consumers the opportunity to sell their homes for a fair, fixed fee.
“This single-minded proposition has got us to where we are today and created a business model that has resulted in Purplebricks becoming the largest estate agency brand in the UK. However, we also recognise that, to extend our market leadership, we'll need to evolve our pricing. That means looking at different pricing strategies to reduce the up-front fee and splitting the payment between listing and completion.
“Following an in-depth pricing study in the first half of the [financial] year, we had hoped to pilot a new pricing structure in early 2020, but the lockdown has delayed this to the autumn.”
However, chief executive Vic Darvey, in the same statement, has given an indication of what the change may be later in 2020.
He says: “I believe reducing the level of the upfront fee will widen the market opportunity significantly, although a fixed fee element will remain a critical part of our success, as hybrid adopters remain more motivated to sell their homes. Reducing the upfront fee will reduce the barrier for many customers in instructing us - while higher fees on completion will allow our Local Property Experts to earn more from each sale, ensuring our self-employed model will not only remain sustainable but become more attractive to the best talent in the industry.”
Concern about its pricing policy might have been heightened by its loss of instructions - they fell 23 per cent in the year to the end of April, most of which was well before the Coronavirus lockdown.
The rest of this morning’s statement - which covered the hybrid’s performance over the past year - reflects the Covid crisis and market fall out that has hit the entire industry.
Purplebricks group revenue was down 2.4 per cent compared to the previous year to £111.1m with an operating loss of £9.4m - much higher than the £1.5m loss a year earlier.
Revenue plummeted 10.7 per cent to £80.5m. At the company's financial year end - so before the sale of its Canadian business last month - it had £31m on the balance sheet, compared with £62.8m a year earlier.
The sale of the Canadian business in recent weeks has contributed £30.6m to the agency’s coffers and the firm says “our exits from the Australian and US markets have allowed us to concentrate on our key operations.”
The statement this morning also reveals what Purplebricks did to bolster its finances during the lockdown period.
In March it furloughed some 50 per cent of its employees - and a similar proportion of its staff in Canada, using the Canadian equivalent scheme - while the agency’s board and executive team took 20 per cent salary cuts.
“Our variable cost model has proved to be a significant advantage during this period - we have lower overheads than most of our competitors, and we can flex up and down with the market over time to manage demand” says this morning’s announcement.
The company also created a fund of up to £2.2m “to provide support payments to our self-employed agents, many of whom operate as limited companies, so were unable to furlough or claim through the self-employed income support scheme.”