Want to kill a few hours? Tell someone you’re thinking about how to price a good or service and ask for their thoughts. (Make sure they’re buying the drinks.)
This is a particularly hot topic in the real estate agent and brokerage services industry. If, as Seth Godin tells us, changing your pricing changes your story, what does a lower price say? A higher one? Refusing to change? Perhaps you’ve heard the story about the traditional agent who refuses to lower commissions based on the principle of self-esteem: “Because I’m worth it!”
There aren’t any easy rules about consumers and price – and if there were any, our easy access to credit and other funny money has blurred them so they’re no longer useful. Ever hear someone say: “I feel uncomfortable when I spend over $200 for shoes?” That sounds like pricing advice, but it’s not.
Cue the traditionalist rationale for refusing to change: “See, consumers don’t know what they want anyway!”
But that’s not true either. Consumer feedback on price is difficult to read because we don’t talk about price. We talk about feeling ripped off. As in Holt Renfrew selling you expensive leather shoes that rip in a month. As in lawyers or accountants or bankers who wait for your instructions instead of advising you on what you might want to do. As in doctors who rush through your physical. As in real estate agents who just stick a sign on your front lawn and walk away.
While most home sellers say they’d like to pay less in commission, less than 10% actually use discount services. Are they confused? No. Like the strategic Canadian voter who doesn’t support their preferred political party, they’re trying to prevent an even worse outcome. Sellers pay full commission to ensure their house is sold for top dollar. In other words, they are worried that paying less means getting less service and less results. And in an industry that’s synonymous with inconsistency, that’s a very understandable fear.
Talking to today’s home seller led us to the simple genius of great service at a discount – the Realosophy 1.5% Home Selling Blitz. The Blitz is a systematic approach to marketing and selling that sells your house for more. All of our Realosophy sales representatives use the system to deliver expert advice and great results to you. And when you do sell, you pay less in seller agent commission. It’s a smarter approach that allows us to charge you less and give you more.
In our story, a lower price isn’t just a gimmick or a way to do even less – it’s about respect for today’s consumer. It’s about feeling delighted rather than ripped off. And, judging from the consumer response we’re getting, it’s a story that makes sense.
Urmi Desai is editor of the Move Smartly blog and is responsible for Realosophy’s business strategy and marketing. Realosophy Realty Inc. Brokerage focuses on researching Toronto neighbourhoods to help their clients make smarter real estate decisions. Email Urmi
April 27, 2011Market |