The country\u2019s largest property portal is certainly aware of the unhappiness with their subscription increases, but JP Farinha, CEO of Property24 says their customers generally understand the rationale behind it.<\/p>\n
\u201cOutrageous\u201d and \u201cexorbitant\u201d were among the comments from the real estate industry upon hearing of Property24\u2019s latest subscription fee increases to become effective on 1 April. Meaning an average increase of as much as 20% and even more in the highest lead bracket (251-750 for sales and +300 for rentals in high interest areas), some estate agencies have indicated they are going to cancel their subscription.<\/p>\n
One of them is Johan van Schalkwyk, owner of Leapfrog real estate agency in Roodepoort. He says come 1 April, his monthly expenses will rise by 34% thanks to Property24\u2019s new tariff increases, and that is excluding the new 15% VAT.<\/p>\n
Van Schalkwyk told Property Professional<\/em> they do get many enquiries from clients via Property24, but they also get sufficient interest via other property portals such as Private Property and their own website. He believes eventually the right buyer will find the right property whether through viewing a show house or via one of the other property websites.<\/p>\n He says they will spend the money saved on their Property24 subscription on social media marketing and more show house sitters. After two months he will check whether there was an impact on their business.<\/p>\n Others like Johann Neethling from Metro Real Estate disagree saying he will keep subscribing to Property24 as he considers it to be a superior product compared to others and therefore an expense that is vital to his company and his agents.<\/p>\n According to Farinha those with 20% and higher increases make up 9% of Property24\u2019s customers. He says it is important to note that their subscription fees are tiered into categories of leads generated, and that different increases apply to different segments.<\/p>\n \u201cIf we segment our customers by percentage increase, we can see the following:<\/p>\n \u201cThe customers with the largest price increases are also those who get the most leads and whose cost-per-lead is extremely low when compared to the average. So although in percentage terms 9% of customer increases look high, in real terms for a large office the subscription fee is actually very low when you take into account the cost per lead and the actual subscription fee.\u201d Farinha says their annual pricing must reflect their continued investment in the platform, which leads to improved products and growing a wider audience. Their biggest spend is on IT, technical staff and marketing with annual cost increases above the official inflation rate. \u201cOur subscription fee increases will therefore likely always be more than inflation,\u201d he explains. Lastly Property24\u2019s subscription pricing started on a very low base and in a lot of cases does not reflect the real value being generated. \u201cGiven all these points it is likely that there will be further increases but they will be applied according to actual input cost increases, value being generated and competitor prices. There will not be large indiscriminate price increases across the board as many in the industry suggest,\u201d concludes Farinha.<\/p>\nProperty24 subscription fees are tiered<\/h4>\n
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\nHe added most of these large offices also buy additional products from Property24 and according to him in most cases their additional spend is far higher than the subscription fee, so if you take into account their total spend, the increase is substantially lower.<\/p>\nRising costs necessitate annual subscription increases<\/h4>\n
\nAnother factor they must consider when setting pricing, is that on an average cost-per-lead basis, their competitor (Private Property), is in most instances charging more than them in respect of for-sale leads.<\/p>\nPrivate Property explains how their price increases work<\/h4>\n