Purplebricks has revealed it is considering changes to its pricing structure to correct “mistakes” of the past.
Chief executive Vic Darvey has told the Press Association news agency that the current flat fee model - £1,399 in London and £899 elsewhere - could be replaced by a more sustainable fee if the housing market continues to be sluggish thanks to Brexit and other factors.
“We’re going to start to look at how we evolve our pricing over time because our pricing has been pretty much the same for five years … With any successful business, you need to adapt and evolve your pricing strategy.”
Darvey tells PA: “In certain markets, in certain pockets of the country where houses aren’t moving quickly, there is a moment of hesitation from customers saying: ‘I know I can save £10,000 but actually do I want to commit to an £899 upfront fee when my house may not sell?’”
For some months there has been speculation that Purplebricks would bring in a no sale-no fee fixed price from late 2019, as well as retaining an upfront option for customers.
The chief executive admits that Purplebricks became distracted by its overseas adventures in the US and Australia - both now closed - and that the expansion had been a mistake.
“We were incredibly distracted by overseas expansion. We’ve admitted we made some mistakes. I think we’ve been really clear in admitting that we’ve made some mistakes and we need to learn from those.”
As the company now focuses exclusively on the UK and Canada, Darvey adds: “It’s really important now that we become a brand that is famous for exceptional service, as well as category-leading fees.”
He says a measure of this will be the degree to which he increases Purplebricks’ market share: currently the agency leads the online/hybrid field easily, but recent analyses say High Street traditional agencies still have between 93 and 95 per cent of the overall market share.
Darvey wants his company to have a 10 per cent share within five years and says that traditional agencies will fall in number.
“You’re going to see High Street agents continue to close more stores, and you’re going to see them move more to a hub model, where geographically they’ll start concentrating themselves, because it’s going to be possible to continue to support the overheads that are required if people are moving online” he tells PA.
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I wouldn’t want Vic’a job for all the tea in China. He does at least seem to acknowledge that people don’t want to pay for a service they’re not getting. But 10% market share? I’ll eat my hat.
“It is important now that we become a brand for exceptional service”. Well good luck with that! You’re famous currently but for all the wrong reasons! It’ll be like doing a three point turn in a supertanker!
Once upon a time in a land far far away...
They are running out of money and 10%???
That will be the Day.
I love all the comments. I don’t believe they are running out of money and the facts are that the large high street agents have no money. I also laugh at the comments about how they will never get 10% the funding is in place to achieve that and as long as there is no property crash then there’s a good chance that target will be met .
I agree, up to a point. I have big reservations when it comes to Purplebricks - the awful adverts, the rapid and ill-advised expansion, the questionable business structure, the chuck more money at it approach, the bullishness, the lack of forward planning, the promises that they never keep, and the clear issues it has in many areas - but you can't deny its impact in shaking up the property industry and offering an alternative.
As I've said before, the number of PB boards on roads, streets and avenues up and down the country is testament to the national reach it has, and the success it has had in piercing through the national consciousness.
I think it's dangerous to write PB off entirely. It clearly has something. And, like you say, traditional agency isn't free from issues and complications. I can understand the schadenfreude from agents who see PB as a reckless upstart, but a company who can have all the problems it has had of late and still become the partner to team GB and secure other lucrative tie-ups is one that shouldn't be dismissed out of hand.
Definitely cannot dismiss PB, but recruiting the right people will be a challenge. Especially from what I hear from previous employees. They need to get that right first.
Ultimately property will always be people based and if you can demonstrate your ability to deliver a service and achieve the best price you can win instructions. There is more than enough business out there for everyone PB is no big threat to independent businesses.
Vic to rescue - LOL. Bruce brothers built a high-growth company, only to crash it as it matured poorly influencing all decisions not trusting anyone but incompetent friends. They did extract wealth in the process on questionable stock sales at the expense of all the LPEs working for peanuts. This stock is now a wet dog and the Board let too much damage already take place with Paul Pindar, Chairman keeping his head down while the Bruce brothers destroyed the same company they founded. By the time Paulie Boy reacted, it was too late. Michael & Kenny injected themselves on everyone. . . Vic has a tough job ahead of himself learning a new industry at the same time.
People are waking up to the fact that paying £900 upfront for an advert is a bad idea. When they bring their pricing model into line with established agents, PB will become indistinguishable from the rest, except of course for all the money they took off their investors. This coming Winter should finish it off.
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