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Adding a Fixed-fee Offering – Cost Versus Benefit

Before launching a fixed-fee service, the agent’s pricing strategy needs to cover the proposed operational costs of running the service. As many agents fear, the risk is that the overheads of operating the fixed-fee service end up costing the business more than the generated revenue. An agent may be able to absorb this cost initially while building awareness and operational effectiveness of the service, but the agent will eventually need to ensure the service makes money due to the negative long-term financial impact.

As well as ensuring a fixed-fee service is profitable, the pricing strategy will likely need to

to be adequately funded to deliver on the service levels promised to the customer. Therefore, the cost of delivering the service will likely need to be reined in, in comparison to a traditional model, and may need to include services that have a fixed-cost of running so the agent can more accurately forecast profitability of the business.

For example, if the agent chooses the basic service to include a single valuation, the listing (photography, description and floorplan), access to the major portals, and use of online booking tools, then delivering the service will likely be non-variable cost. However, if the agent wants to include or upsell customers for viewings and further support at a fixed price, then it may be more difficult to calculate the profitability of a service as it could have greatly varying cost depending on the duration of the sale’s process.

If you would like to find out what are the key factors you need to consider when adopting a hybrid model, download this our 8 Steps To Hybrid eBook here.

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