Accessible Pricing
Introduction
Although pricing our home at fair or market value is a reasonable pricing strategy, it isn’t necessarily the best strategy to achieve the best price. Here I discuss the reasons why it isn’t necessarily the best strategy, and why accessible pricing is a better pricing strategy to implement to achieve the best price.
Pricing our home at fair or market value isn’t necessarily the best way to achieve the best price
In previous sections, I’ve discussed how and why overpricing our home can be an ineffective pricing strategy and counterproductive to our purpose of not only selling our home, but also for the best price.
But did you know that even pricing our home at fair or market value isn’t necessarily the best way to sell it, at least not for the best price?
How can this be?
One can reasonably assume that if we simply price our home at fair or market value, then we can reasonably expect to attract buyers and offers. And one would not be wrong in that assumption.
However, this is simply half of the win. The fact of being able to attract buyers, and even offers is one thing; but being able to attract buyers and offers to the point of achieving the best price is certainly another!
Pricing our home at fair or market value can reasonably attract buyers and offers without a doubt, but not necessarily enough to achieve the very best price that we could possibly achieve compared to pricing it more attractively.
Why pricing our home at fair or market value isn’t necessarily the best way to achieve the best price
Fair or market value does not necessarily excite buyers, nor compel or stimulate their interest to want to come through our door for a viewing. In fact, fair or market value is to be expected by buyers and doesn’t make one property stand out over another (unless every competing property is overpriced). In all likelihood, our home will be competing with other properties, some of which are also priced at fair or market value, meaning that our home will not be any more saleable than those properties.
And if our home is not any more saleable than the competition, then buyers will have a more difficult job in deciding which property to give their most attention or priority to.
One does acknowledge that buyers tend to view more than one property before deciding which one to buy, but not all buyers get around to viewing all of the properties that they intend to view for one reason or another. It’s quite possible, for example, that the buyer may decide to buy the third property that they’ve viewed without needing to view the rest of the properties on their list. This decision could be due to a number of reasons, but here I highlight a couple of possible reasons as examples:
The buyer may have decided that the third property fits their needs and sees no reason to expend further time and effort in viewing the rest on their list. It may well have been the case that our home equally fits or was even a better fit for the buyer’s needs, but as it was, for example, the fifth property on their list to be viewed, we’ve lost out on the chance for the buyer to come to view our home.
The buyer may have decided that the third property fits their needs and is unable to view the rest on their list due to time constraints or pressure. Once again, it may well have been the case that our home equally fits or was even a better fit for the buyer’s needs, but as it was, for example, the fifth property on their list to be viewed, we’ve lost out on the chance for the buyer to come to view our home.
Even if the asking price does draw reasonable attention from buyers to want to view our home, if the price does not make our home any more saleable than the competition, then there’s no telling where the buyers will place it on their list among the other properties that they intend to view. The further down our home is on their list, the less likely the buyers will get around to viewing it for the possible reasons stated above.
It’s worth noting that where our home sits on their list may not necessarily reflect the buyers’ view or preference relative to the other properties on the list. Although it’s possible that buyers may sort their list in order of preference or priority, it’s also possible that buyers simply added properties of interest to their list as and when they saw them and our home just happens to be the fifth property added to the list.
So if our home is not any more saleable than the competition, this means we have not given the buyers any reason to want to put it at the top (or near the top) of their list. The higher our home is on their list, the more likely the buyers will get around to viewing it. And if our home is at the top (or near the top) of their list, then the buyers will most likely view it first, or at least view it before getting around to most of the other properties on the list!
Simply put, pricing our home at fair or market value can reasonably attract buyers and offers without a doubt, but it doesn’t necessarily make our home more saleable than the competition, so we may miss out on some buyers that we could have otherwise attracted with a more saleable/attractive price!
So although we can reasonably expect to attract buyers and offers, the level of interest, competition and demand we receive may not necessarily be strong enough to achieve the best price!
We need strong buyer engagement to achieve the best price
As mentioned, fair or market value does not necessarily excite buyers - more to the point, it does not necessarily excite enough buyers to want to strongly engage with our home.
It is in fact strong buyer engagement that we should aim to encourage (as opposed to just attracting a few buyers), as this is what brings the strong level of interest, competition and demand we’d need to achieve the best price!
To be clear, I am not suggesting that it’s impossible to achieve the best price with the asking price at fair or market value, and without the strongest buyer engagement. But doing so does not necessarily stack the odds in our favour to accomplish this. And although we may receive buyer interest and offers, we may still find those offers falling short of the best price, maybe even short of the market price!
The best way to stack the odds in our favour as far as achieving the best price is concerned, is to price in such a way to encourage strong buyer engagement!
Encouraging strong buyer engagement with an accessible price
The key to encouraging strong buyer engagement is to offer accessibility, or more specifically, offering a more accessible price for buyers.
We should present to buyers a price that is more attractive and accessible than fair or market value!
Although fair or market value can reasonably attract buyers and offers without a doubt, an accessible price will be more attractive to buyers, offering a lower barrier to entry for them to engage with our home, thereby creating excitement among them and stimulating their interest for our home!
Am I suggesting that we list our home at a very low asking price?
Certainly not, but I am suggesting that we price it in such a way to offer buyers a lower barrier to entry to encourage stronger buyer engagement than what we could possibly receive with the asking price at fair or market value.
Although we are not underpricing per se, there is certainly an appropriate price point that would offer buyers a lower barrier to entry to encourage strong buyer engagement, yet enables us the best chance of achieving the best price. I have discussed how we can arrive at this appropriate price point from the perspectives of saleable pricing, buyer enquiry pricing, and band pricing in more detail elsewhere in this guide - click the links to jump to those sections.
There’s no doubt that an accessible price can help to make our home more saleable than the competition, that even if the buyers have more than one property that they intend to view, it is very likely that our home will be placed at the top (or near the top) of their list, as they would want to view it first, or at least view it before getting around to most of the other properties on the list!
From the buyers’ perspective, seeing our home offering an accessible price makes their job easier in deciding which property from the choices available in the market that they should give their most attention and priority to. Essentially, we are helping them to give our home their attention and priority over the competition!
Simply put, presenting an accessible price enables us to attract as many buyers as we possibly can, including the buyers that we might have otherwise missed out on had we chosen to price our home at fair or market value instead.
It’s worth pointing out that although the most obvious buyers for our home will be those who are looking in the price bracket where our home belongs, potential buyers can also be found among those whose maximum price that they’re prepared to pay for their next home is below the market value of our home, i.e. the buyers who are looking in the lower price bracket below the market value of our home.
As far as the lower bracket buyers are concerned, if our home is priced at fair or market value, either they will consider it to be priced too high for their budget if they indeed come across it, or our home will not be visible to them at all in their search results if it falls outside of their search/price criteria. Simply put, the fair or market price of our home will be an inaccessible price for the lower bracket buyers, meaning that they aren’t likely to form part of, nor be able to further strengthen the buyer engagement for our home.
For example, if the fair or market price of our home is £1,000,000, this will be an inaccessible price for buyers whose maximum price is below that figure, and so those buyers aren’t likely to form part of, nor be able to further strengthen the buyer engagement for our home.
However, if we presented a more accessible price, for example, a price below £1,000,000, then we’d have the opportunity to also attract the lower bracket buyers that we would have otherwise missed out on.
Why would we want to also attract lower bracket buyers?
In a lot of cases, a buyer’s maximum price is merely their starting point. Generally, buyers seeing a property priced above their maximum price are likely to ignore it and move onto other properties that are more suitable to their budget. Many of those buyers do not presume that there’s a chance of them being able to secure the property and so choose not to pursue it (at least not without being given a reason to presume otherwise).
An accessible price gives those buyers that reason. It allows for lower bracket buyers to engage further, meaning that there’s a chance that they’d also form part of, as well as further strengthen the buyer engagement for our home, and end up coming through our door for a viewing.
A buyer may not be able to fully appreciate the appeal of one’s home until they are through the door and seeing it in person. And it’s only when they are through the door and appreciating the appeal in person are they then more personally invested in the property. And at that point, they are more willing to participate and compete with other interested buyers.
In other words, it’s very possible that even lower bracket buyers can decide to participate and compete with other interested buyers once they are through our door, able to see the appeal of our home in person and become personally invested. If we were to stick to the fair or market price, then the lower bracket buyers aren’t likely to come through the door at all!
But aren’t these still buyers whose maximum price is below the fair or market value of our home?
As mentioned, a buyer’s maximum price is merely their starting point. Once a buyer becomes more personally invested in a property, there’s always a chance that they’re prepared to pay more than they initially expected. In fact, according to Rightmove, 70% of buyers pay up to 20% more than they initially expected to pay. And interestingly, according to an article published on the Hamptons website, approximately 13% of viewings conducted across England and Wales in 2023 were of homes above the purchaser’s budget. In London and the Southeast, this number was 17% in the same year. Click here to read the full article.
Another thing to consider is that, even the participation of lower bracket buyers further strengthens the level of interest, competition and demand for everyone else, compelling every interested buyer to make offers that are stronger and more competitive than the offers they otherwise would have made if the lower bracket buyers did not participate.
Achieving the best price with accessible pricing
Creating a strong bargaining position for ourselves by presenting an accessible price so that we’re able to achieve the best price, is not too dissimilar from an auction.
Let’s consider for a moment how an auction undertakes to achieve the best price with the help of the image below.
Let’s assume that a painting at auction is valued at an estimated £1,000,000 - this is the market value and target price.
As you are no doubt aware, auctions do not start the price at around the estimated price. Instead, auctions start the price somewhere below the estimated price. In other words, auctions do not start the price at the fair or market value, but somewhere below it.
Why is this?
A starting price at around the estimated price is not the best way to encourage strong buyer engagement, as buyers aren’t usually excited over fair or market price.
A starting price below the estimated price is a lower barrier to entry, presenting buyers with a more attractive and accessible price to engage with the painting at auction, thereby creating excitement among them and stimulating their interest for the painting.
Excitement and interest among buyers is what encourages strong buyer engagement, which in turn, brings the strong level of interest, competition and demand that creates bidding wars, pushing up the price to meet or exceed the market value/target price!
Such a fierce and competitive environment instils a sense of urgency and a fear of missing out (FOMO) among those interested buyers, which are powerful catalysts for bidding wars.
The starting price is usually decided at a price point that is just enough to encourage strong buyer engagement, yet enables the seller the best chance of achieving the best price.
If the starting price was at around the estimated price; then this wouldn’t excite buyers (at least not excite enough buyers), meaning that too few of them would engage, leading to uneventful competition and demand, and as a consequence, uneventful bidding. Under such circumstances, the bidding isn’t likely to be competitive enough to be close to the market value/target price!
Auctions are perhaps the best example of accessible pricing in action. The very premise of an auction is to present a lower barrier to entry, i.e. the starting price, to encourage strong buyer engagement, with the aim of achieving the target price or above. It would certainly be to our benefit to adopt a similar approach with regards to the selling of our own home.
Receiving offers below the target price
One may be wondering, ‘if I list my home at an accessible price and only receive offers that are below my target price, do I have to accept any of them?’
The short answer is: no you do not.
We have no obligation to accept any offer that doesn’t meet our target price.
For example, if our target price is £1,000,000 and our accessible price is £900,000, we are not obliged to accept any offers below £1,000,000.
Even auctions allow for a reserve price, which is the minimum price that, for example, the painting’s owner will accept as the winning bid. If the winning bid is lower than the reserve price, the owner is not obliged to accept this bid.
An accessible price can be listed as ‘Offers Over’ or ‘Offers in Excess of’ (OIEO), to let the buyers know that we’re expecting to sell for a higher price.
Accessible pricing can be a litmus test for value
It’s worth noting that accessible pricing can be a litmus test for value, in that rather than listing a fixed asking price and waiting for a buyer to meet that price, an accessible price allows for buyers to come in and put forward their best offers, showing us how much they’re prepared to pay, without the knowledge of our target price.
If interest, competition and demand for our home is strong, yet the offers aren’t strong or competitive enough to meet our target price, then this may be a sign that our home is overvalued.
Thanks to the wealth of property resources and data that are readily and freely available, buyers are informed and savvy to the market and are able to understand and recognise the true value of a property. And when spurred by strong enough competition and demand, buyers are prepared to contest against each other, resulting in the winning buyer, more often than not, paying a fair market price or above.
However, even in a fierce and competitive environment and as mentioned earlier, 70% of buyers pay up to 20% more than they initially expected to pay, many buyers aren’t prepared to pay considerably ‘over the odds’ above the market value. So if our target price isn’t met despite strong interest, competition and demand, then this may be a sign that our target price doesn't necessarily accurately reflect the true market value, and will need to be adjusted to a more realistic target price.
Accessible pricing breaks down the ‘paywall’ for buyers
Earlier, I mentioned that a buyer may not be able to fully appreciate the appeal of one’s home until they are through the door and seeing it in person. And it’s only when they are through the door and appreciating the appeal in person are they then more personally invested in the property. And at that point, they are more willing to participate and compete with other interested buyers.
No matter how good our property listing’s photos, description or video may be, they may not be doing our home justice, and there’s no substitute for experiencing the appeal of one’s home in person!
The problem however is, if we don’t give buyers something to be excited about, then some of those buyers aren’t likely to come through the door at all!
This type of problem is well known to be addressed, particularly by paywall and freemium services, most notably Netflix and Spotify as two obvious examples.
How do paywall and freemium services attract strong engagement?
Although Netflix and Spotify, as examples, can market to potential subscribers all of the benefits that they can receive from their services, many of those individuals cannot fully appreciate, nor be invested in those services until they've experienced them first-hand. And when people’s time and attention are valuable amidst competition, both Netflix and Spotify need to give them a reason to be excited about their services and to encourage strong subscriber engagement.
In the case of Netflix, rather than charging the full monthly subscription fee upon registration, the service offers signup promotions such as ‘Starting at £4.99/month’ or ‘Free for 30 days’, to break down their paywall, presenting a lower barrier to entry to encourage strong subscriber engagement, allowing subscribers easier access to experience the content and service first-hand.
The lower £4.99/month fee is of course Netflix’s accessible price.
The real value to Netflix is of course the full monthly subscription, and for some subscribers, they are only willing to commit to the full subscription long term once they’ve sampled and experienced the content and service first-hand.
If Netflix simply marketed the full monthly subscription fee from the outset and offered no promotion or incentive, then their subscriber engagement would be less eventful, meaning that there would be less subscriber traffic accessing and sampling the content and service, and therefore, less subscribers eventually committing to the full subscription long term.
Spotify in a similar fashion, offers promotions and incentives to break down their own paywall to encourage strong subscriber engagement for their own content and service.
Breaking down our own perceived ‘paywall’ for buyers
Although our home doesn’t have a ‘paywall’ in the same sense as Netflix or Spotify, or other similar services, our asking price can nevertheless be an obstacle that stands in the way of plenty of buyers wanting to come through our door for a viewing. In other words, our asking price can act almost like a perceived figurative ‘paywall’ for those buyers.
Pricing our home at fair or market value can reasonably attract buyers and offers without a doubt, but it wouldn't necessarily encourage the strongest buyer engagement. For many buyers, our home being priced at fair or market value is in a similar vein to Netflix or Spotify marketing their full monthly subscription fee without promotions or incentives. Those buyers, perceiving our asking price as a figurative ‘paywall’, wouldn’t be able to experience or fully appreciate the appeal of our home first-hand, and in turn, wouldn’t be able to participate and compete with other interested buyers, because they aren’t likely to come through our door in the first place!
An accessible price would break down our own perceived figurative ‘paywall’ in a sense that our asking price would become less of an obstacle and is now a lower barrier to entry for those buyers. So instead of some of those buyers being unexcited, indifferent or put off, we’d now be capturing their excitement and interest to want to come through our door!
Naturally, each and every buyer’s excitement and interest we capture only serves to strengthen the buyer engagement, and in turn, strengthens the interest, competition and demand for our home!
From a social proof affirmation standpoint, buyers won’t be able to fully gauge nor appreciate how popular our home is and the level of buyer interest and engagement it receives simply from seeing our property listing alone.
Breaking down our own perceived figurative ‘paywall’ would benefit us a great deal so as to encourage as many buyers as possible to come over, to not only view and appreciate our home in person, but also to see first-hand the level of buyer interest and engagement it receives, in particular, the level of competition and demand, and the buyers whom they will be competing against.
And naturally, the more buyers we are able to bring into our home, the heavier the competition and demand becomes, and the more appealing our home is perceived by the buyers, thanks to social proof affirmation working in our favour!
After all, it’s natural to perceive something as being more valuable the more people that want it!
We should be attracting strong buyer engagement, not just attracting buyers
Ultimately, we should aim to be attracting strong buyer engagement, not just attracting buyers per se.
The best price is achieved as a result of strong interest, competition and demand, which comes from having strong buyer engagement. And to receive strong buyer engagement, we have to give the buyers something to be excited about!
Getting in touch with me
If you would like to discuss any of the above points with me further, or if you need help or have any questions in general, click here to get in touch with me.
Throughout this section, I’ve touched on who the obvious and potential buyers are for our home. Those buyers make up our likely pool, which I cover in the next section. I also cover in the next section, buyer enquiry pricing - a pricing strategy that puts accessible pricing into practice.
So if you’re interested in knowing more about our likely buyer pool and buyer enquiry pricing, come join me in the next section.
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Credit goes to Netflix and Spotify for the images used in this section