Post by shati106 on Nov 2, 2024 2:01:11 GMT -5
Dynamic pricing technology has conquered retail, the service sector and has reached the real estate market. However, most developers perceive DCO as broccoli - we heard that it is useful, but we will not change prices regularly.
So what is DCO?
It is a technology based on demand and market conditions. It helps businesses extract maximum profit from a product in a given situation.
However, not all developers use dynamic pricing. Some change the price list once a month at most, and at critical moments freeze prices and wait to see what happens next.
Others try to change prices more often, but do not see results and become disappointed.
Why are developers abandoning dynamic pricing?
They don't see the real benefit of technology
Some developers are used to working in social media marketing service the paradigm of a financial model and sales plan. They have a goal, and they strive to achieve it.
This approach threatens:
Loss of potential profit
Dynamic pricing based on user requests and market conditions allows businesses to extract maximum profit. For example, in six months the price of objects can grow and increase the projected revenue by at least 14 million. In some projects this figure reaches 100 million.
The inevitability of losses during market turmoil
Sales cannot be separated from external factors. The balance of supply and demand is fragile, it is affected by many factors: from the general state of the economy to the appearance of new residential complexes in the area or competitors' promotions. Dynamic pricing helps not only to increase profits, but also to protect against potential losses.
2. They don’t have time to change prices at the required pace
Let's look at how prices usually change for a developer.
The analyst collects market data for several hours to two days. He compiles a report, thinks for a long time, and then makes an "expert verdict" - to increase or decrease the price.
A couple of days later, the head of the sales department, analyst and other participants gather to approve the price list. The analyst makes adjustments, manually uploads the price list to CRM, 1C, to third-party platforms (Yandex. Real Estate, Domclick, N1, Avito)
Dynamic pricing is no longer dynamic. The adjustments made are no longer relevant, the potential benefit is lost.
So is the game worth the candle?
Let's look at a small case.
Conditions:
project implementation period: 2 years;
the cost of apartments begins to rise if the rate of sales increases;
In case of price increase, apartments always become more expensive by 2.5% regardless of the number of rooms.
Start of sales
To make sure the numbers aren’t endless, let’s talk about the situation in terms of sales of studio apartments.
Sales have started. At the beginning of the sixth week of sales, demand is increasing. Our analyst managed to react in time and update the price list.
The change in price caused demand to immediately decrease slightly and become more uniform.
As a result, by the 10th week we earned 113.5 million, and sold 658 m² of studios.
With the weekly increase, we sell fewer apartments than we could, but the price per square meter is becoming higher on average.
Let's assume that there were 10-11 more demand surges in 24 months. In this case, by the end of sales, we will have earned 1 billion 448 million. Using simple operations, we arrive at a sum of 22 additional million.
So what is DCO?
It is a technology based on demand and market conditions. It helps businesses extract maximum profit from a product in a given situation.
However, not all developers use dynamic pricing. Some change the price list once a month at most, and at critical moments freeze prices and wait to see what happens next.
Others try to change prices more often, but do not see results and become disappointed.
Why are developers abandoning dynamic pricing?
They don't see the real benefit of technology
Some developers are used to working in social media marketing service the paradigm of a financial model and sales plan. They have a goal, and they strive to achieve it.
This approach threatens:
Loss of potential profit
Dynamic pricing based on user requests and market conditions allows businesses to extract maximum profit. For example, in six months the price of objects can grow and increase the projected revenue by at least 14 million. In some projects this figure reaches 100 million.
The inevitability of losses during market turmoil
Sales cannot be separated from external factors. The balance of supply and demand is fragile, it is affected by many factors: from the general state of the economy to the appearance of new residential complexes in the area or competitors' promotions. Dynamic pricing helps not only to increase profits, but also to protect against potential losses.
2. They don’t have time to change prices at the required pace
Let's look at how prices usually change for a developer.
The analyst collects market data for several hours to two days. He compiles a report, thinks for a long time, and then makes an "expert verdict" - to increase or decrease the price.
A couple of days later, the head of the sales department, analyst and other participants gather to approve the price list. The analyst makes adjustments, manually uploads the price list to CRM, 1C, to third-party platforms (Yandex. Real Estate, Domclick, N1, Avito)
Dynamic pricing is no longer dynamic. The adjustments made are no longer relevant, the potential benefit is lost.
So is the game worth the candle?
Let's look at a small case.
Conditions:
project implementation period: 2 years;
the cost of apartments begins to rise if the rate of sales increases;
In case of price increase, apartments always become more expensive by 2.5% regardless of the number of rooms.
Start of sales
To make sure the numbers aren’t endless, let’s talk about the situation in terms of sales of studio apartments.
Sales have started. At the beginning of the sixth week of sales, demand is increasing. Our analyst managed to react in time and update the price list.
The change in price caused demand to immediately decrease slightly and become more uniform.
As a result, by the 10th week we earned 113.5 million, and sold 658 m² of studios.
With the weekly increase, we sell fewer apartments than we could, but the price per square meter is becoming higher on average.
Let's assume that there were 10-11 more demand surges in 24 months. In this case, by the end of sales, we will have earned 1 billion 448 million. Using simple operations, we arrive at a sum of 22 additional million.