Band Pricing
Introduction
Band pricing is an effective pricing strategy that leading property portals themselves strongly recommend to make the best use of their platforms, yet is an often overlooked and underutilised strategy by many. Here I go into detail about band pricing and how we can use this pricing strategy to market our home with optimal and maximum exposure to buyers, especially those within our likely buyer pool.
Band pricing takes all of the pricing strategies previously discussed a step further
In previous sections, I’ve covered fast pricing, saleable pricing, accessible pricing, and buyer enquiry pricing.
Band pricing, in essence, takes all of the above, especially buyer enquiry pricing, a step further.
What is band pricing?
Band pricing is a pricing strategy that follows the property portal’s own price points in order to market a property across two different price bands for optimal and maximum exposure.
As far as I’m aware, there’s no official name for this type of pricing strategy, so I personally refer to it as band pricing (or price point pricing).
Band pricing is a strategy that Rightmove themselves recommend!
Rightmove recommends setting the price at one of their minimum or maximum price points. According to them, property listings that are priced in this way get 11% more views than those that aren’t. Zoopla also recommends this same approach to pricing.
You may be wondering, ‘why should I follow Rightmove and Zoopla’s recommendation? If I have a certain price in mind that I want to achieve for my home, why should I not just list it for that very price?’
Good question!
Rightmove and Zoopla, being the UK’s top two market leading property portals, boasts the most extensive property data, not to mention the most buyer traffic by far, in the UK. Most if not all homeowners/sellers and property agents choose to market their properties on either or both of these portals, as they’re the most relied upon resource for buyers who are looking for their next home.
Given the amount of property data that they hold, as well as the deep insight that they have on the UK property market, including buyer and seller behaviour; Rightmove and Zoopla are in the best position to discern what properties are selling and how.
In all likelihood, we would be choosing to market our home on Rightmove or Zoopla or both, in which case, it would certainly be prudent and make the most sense to follow their recommendation on how to make the best use of their platforms when it comes to pricing our home.
What are the ‘minimum or maximum price points’ that Rightmove is referring to?
To better understand this, we need to visit Rightmove and Zoopla.
When searching for properties on either of these portals, we can see the ‘price’ dropdown box as part of the search criteria, near the top of the page.
The dropdown box will open a dropdown menu, showing all of the price points available to pick from as part of the search criteria. Not only do we need to be aware of the price points that are available, but also the increments between those price points, since the increments increase as the price points go up.
We can see that the price points and increments differ between the two portals. For example:
On Rightmove, the increments increase by £100,000 between £700,000 to £1,000,000, and increase by £250,000 between £1,000,000 to £2,000,000.
On Zoopla, the increments increase by £100,000 between £1,000,000 to £2,500,000, and increase by £250,000 between £2,500,000 to £5,000,000.
Why are the price points and increments important?
Being aware of and understanding the price points and increments helps us to know how to price our home correctly and which price bands it should appear in for optimal and maximum exposure.
Before going over why band pricing is an effective and advocated pricing strategy by Rightmove and Zoopla, I want to first go over the problems with the most commonly utilised pricing strategies from a band pricing perspective, for the purposes of contrast.
The problems with the most commonly utilised pricing strategies from a band pricing perspective
The most commonly utilised pricing strategies would be to either, a) price one’s home at fair or market value, or b) over ambitiously price (i.e. overprice) one’s home.
Pricing at fair or market value
Let’s first turn our attention to pricing one’s home at fair or market value. You may be wondering, ‘what’s wrong with pricing our home at fair or market value?’
Aside from the problems I’ve covered in my discussion of accessible pricing; simply pricing our home at fair or market value without consideration to band pricing, disregards the property portal’s own price points. From a band pricing perspective, pricing our home without regard to the price points can leave our home with limited visibility and exposure to buyers!
To better understand this, let’s assume that our home has a market value of £1,850,000.
And let’s also assume a scenario where we indeed price our home on Rightmove at fair or market value.
From looking at Rightmove's ‘price’ dropdown menu, we can see that £1,750,000 and £2,000,000 are the two closest price points to our home’s market value. And since our home’s market value is in between these two price points, our home will only appear in one price band in between either of these price points in the search results.
In other words, our home will only be visible in the search results for buyers searching from any minimum price up to £2,000,000, or from £1,750,000 to any maximum price. In either case, our home would only sit in one price band!
As far as our likely buyer pool is concerned, our home will indeed be visible to our likely buyer pool in this scenario, in particular, our most likely and promising buyers who are searching from £1,750,000 (or from any minimum price) and buying towards £1,850,000 as the top of their price range.
However, our home will miss a large portion of the rest of our likely buyer pool, in particular, our most likely and promising buyers who are searching from any minimum price and buying towards £1,750,000 as the top of their price range.
As our home would not be visible to the rest of our likely buyer pool, i.e. those who are buying towards £1,750,000, those large portion of buyers aren’t likely to form part of, nor be able to further strengthen the buyer engagement for our home. The participation of those large portion of buyers could potentially serve to further strengthen the level of interest, competition and demand for our home, and be converted into offers down the line - an opportunity that we would indeed miss out on!
And so, it should be apparent that from a band pricing perspective, this type of approach to pricing our home can result in limited visibility and exposure of our home to our likely buyer pool, meaning that our home isn’t likely to receive the strongest buyer engagement that it could possibly receive!
If we are not implementing a pricing strategy that aims to encourage the strongest buyer engagement for our home, then we are not stacking the odds in our favour to achieve the best price (i.e. £1,850,000 or above), nor are we taking the necessary steps to prevent our home from the possibility of ending up stagnant and stale on the market and/or needing a price reduction later down the line to necessitate a sale!
Overly ambitious pricing (or overpricing)
Next, let’s turn our attention to over ambitiously pricing one’s home.
Let’s assume an alternate scenario where our home once again has a market value of £1,850,000, but instead we price it on Rightmove at £1,950,000.
In this scenario, our home will still sit in the same price band (i.e. in only one price band) with the same problems as the first scenario; only now it’s overpriced for its value!
As far as our likely buyer pool is concerned, our home will not be visible to our likely buyer pool at all, as it will completely miss the pool altogether, and therefore even more likely to end up stagnant and stale on the market and/or needing a price reduction later down the line to necessitate a sale!
Simply visit Rightmove or Zoopla (or any other property portal) and you will be able to observe plenty of examples of this type of approach to pricing. Properties ending up stagnant and stale on the market and/or needing a price reduction are mostly due to overly ambitious pricing or overpricing, but also partly due to limited visibility and exposure to buyers from just sitting in one price band!
For your reference, I've put together a PDF document of a standard property search on Rightmove showing the search results, by way of an example. The search results include the price history for each listing where available. From the document, you will notice examples of properties that have become stagnant and grown stale on the market, with many having had a price reduction or successive price reductions! Many of those properties remain on the market as a result of overly ambitious pricing or overpricing. You will also notice that many of those properties are priced in such a way that they sit in just one price band, rather than priced at one of Rightmove’s price points as recommended by the portal. Click here to open the PDF document.
Why band pricing is an effective and advocated pricing strategy by Rightmove and Zoopla
So why do the property portals recommend pricing our home at one of their price points? Or to put it another way, why do the portals recommend band pricing?
Band pricing is an effective pricing strategy because not only does it put into action fast pricing, saleable pricing, accessible pricing, and buyer enquiry pricing that I’ve all previously covered; it does so whilst maximising our home’s visibility and exposure to buyers from across two price bands!
What do I mean by this?
To better understand this, let’s assume once again that our home has a market value of £1,850,000.
As mentioned earlier, from looking at Rightmove's ‘price’ dropdown menu, we can see that £1,750,000 and £2,000,000 are the two closest price points to our home’s market value.
But rather than pricing our home on Rightmove at fair or market value as in the first scenario, we should instead price it at £1,750,000 - remember, Rightmove recommends setting the price at one of their ‘minimum or maximum price points’.
Why set the price at £1,750,000, not £2,000,000?
First of all, setting the price at £2,000,000 would be overly ambitious and overpricing our home relative to the true market value (i.e. £1,850,000). The problems of overly ambitious pricing or overpricing, including the traps and pitfalls, I have covered in great detail elsewhere in this guide - see the following sections:
Getting The Price Right The First Time Matters
The Time Value Of Our Home
The Cost Of Waiting For The Market
Social Proof Affirmation
Seller Sentiment And Bias
Our Likely Buyer Pool And Buyer Enquiry Pricing
Setting the price at £1,750,000 is the best option for the following reasons.
Our home will be sitting across two price bands
Our home will be visible in the search results for buyers searching from any minimum price up to £1,750,000, and for buyers searching from £1,750,000 to any maximum price. In other words, our home will be sitting across two price bands, not just in one!
As Rightmove puts it, sitting across two price bands ‘will make sure you’re seen by people searching both up to and from a certain price’.
In our scenario, our home sitting across two price bands will be seen by people searching both up to and from £1,750,000.
Most importantly, our home will have maximum visibility and exposure to our likely buyer pool from across two price bands!
In particular, it will be visible to our most likely and promising buyers who are searching from any minimum price and buying towards £1,750,000 as the top of their price range, as well as to those who are searching from £1,750,000 (or from any minimum price) and buying towards £1,850,000 as the top of their price range!
In essence, we are simply following Rightmove’s own recommendation for pricing our home on their portal. Clearly, £1,750,000 is the closest price point available that is directly below our home’s market value. If there was a closer price point to choose from on the portal’s ‘price’ dropdown menu, say £1,800,000, then certainly we would price our home at £1,800,000 instead.
Our home will be encouraging the strongest buyer engagement
As mentioned, our home will have maximum visibility and exposure to our likely buyer pool from across two price bands. Not only is it important for our home to be visible to the portion of our likely buyer pool who are buying towards £1,850,000, i.e. our home’s market value; it is just as important for it to be visible to the rest of the pool who are buying towards £1,750,000, i.e. the closest price point directly below our home’s market value.
As mentioned in a previous section, 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!
Every buyer that becomes part of the buyer engagement can potentially participate in the competition for our home, and be converted into offers down the line!
But still, aren’t some of these buyers whose maximum price is below the market value of our home?
Indeed that is correct; but 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.
I have covered in great detail in a previous section, the merits of attracting lower bracket buyers. I will summarise those very merits for the purposes of our scenario.
For the portion of our likely buyer pool who are buying towards £1,750,000 as the top of their price range (i.e. the lower bracket buyers), it is entirely possible that they would be prepared to pay more than they initially expected and meet (or even exceed) our £1,850,000 market price, if our home is indeed their ideal home that they want to secure.
However, in order for those portion of buyers to be able to experience and fully appreciate the appeal of our home first-hand, and therefore, participate and compete with other interested buyers; our home would need be to be visible to them and give them an attractive/saleable price to be excited about, so that they’re encouraged to engage and come through our door.
The other thing to add here is that £1,750,000 is a price that breaks down our own perceived figurative ‘paywall’.
Social proof affirmation will work in our favour
£1,750,000 is clearly an attractive/saleable price that is bound to encourage strong buyer engagement for our home.
From a social proof affirmation perspective, the stronger the buyer engagement is for our home, the more attention, interest and excitement it will draw from subsequent buyers, compelling them to want to join the crowd, thereby further strengthening the buyer engagement, and in turn, further strengthening the level of interest, competition and demand for our home!
Thanks to social proof affirmation, interest will beget interest!
After all, it’s only natural to perceive something as being more valuable the more people that want it!
Ultimately, only by sitting across two price bands is our home able to encourage the strongest buyer engagement!
£1,750,000 is a price point that would sit inside our likely buyer pool
In my previous discussion on buyer enquiry pricing, I explained that to get the most buyer engagement from our likely buyer pool, we should determine a buyer enquiry price that would sit inside in the pool. This will allow for our home to be seen by and appeal to more buyers within the pool.
£1,750,000 is clearly a price point that would sit inside our likely buyer pool.
If we’re pricing our home at £1,750,000, does this mean that we’re looking to sell for that price?
No, that is certainly not the purpose of band pricing. The pricing strategy is not about selling our home for less than its true market value.
Our ultimate objective is very much to achieve the best price, which in the case of our scenario, is to achieve or exceed the market value of £1,850,000.
Remember, strong buyer engagement is what brings the strong level of interest, competition and demand we’d need to achieve the best price. And to receive strong buyer engagement, we have to give the buyers something to be excited about!
£1,750,000 would clearly be a more accessible and exciting price for buyers than £1,850,000, especially for those that recognise and understand the market value of our home. The more accessible price is bound to encourage stronger buyer engagement for our home than if we were to price it at fair or market value.
£1,750,000 is the more accessible price that breaks down our own perceived figurative ‘paywall’.
Remember, our choice of choosing £1,750,000 as the price point is mainly due to the fact that, as mentioned earlier, this is the closest price point available on Rightmove that is directly below our home’s market value.
In our scenario, £1,750,000 ticks the boxes of being our fast price, saleable price, accessible price, and buyer enquiry price!
Rather than listing our home at a fixed price, if we want to make it clear to the buyers that we’re expecting to sell for a higher price, we can certainly list it as ‘Offers Over £1,750,000’ or ‘Offers in Excess of £1,750,000’.
We should be pricing our home with round numbers
You will have noticed that the price points from the ‘price’ dropdown menu (both on Rightmove and Zoopla) are all round numbers ending in zero. And so, following Rightmove’s recommendation to pricing our home at their own price points means that we’re supposed to price it with round numbers.
Essentially, this means that we are recommended to stick to the round numbers as set out from the ‘price’ dropdown menu and not deviate from these numbers.
What happens if we deviate from the recommended round numbers?
Deviating from the recommended round numbers, even by just £1, will significantly impact our home’s visibility and exposure to buyers. Even a mere deviation of just £1 can mean the difference between our home sitting across two price bands or sitting in just one price band!
To better understand this, let’s assume that we now price our home from £1,750,000 to £1,750,001.
Even though we merely added £1 to the price, our home is no longer visible in the search results for the buyers within our likely buyer pool who are searching from any minimum price up to £1,750,000. In fact, our home no longer sits across two price bands, but now sits in just one price band!
In other words, even the slightest deviation from the recommended round numbers can result in our home to not only go from sitting across two price bands to sitting in just one price band, but also end up missing a large portion of our likely buyer pool!
We should avoid psychological pricing
On a similar note, we should avoid psychological pricing. Rightmove advises that psychological pricing is outdated and simply doesn’t work in the world of online home hunting.
Psychological pricing in this context, is the ‘pricing down’ of one’s property to end in ‘99’, for example, ‘pricing down’ £1,750,000 to £1,749,999. Psychological pricing is yet another commonly utilised pricing strategy. The purpose of such a strategy is to make the property seem more ‘attractively priced’, but as Rightmove themselves have pointed out, it's an ineffective strategy, especially from a band pricing perspective.
Let’s consider the impact that psychological pricing can have on our home if it was, a) already sitting in just one price band, or b) sitting across two price bands.
Already sitting in just one price band - if our home already sits in one price band at the market value of £1,850,000 and we adjust the price to £1,849,999 for example, there is very little to suggest that the new price is any more attractive to the buyers than the original price.
Sitting across two price bands - if our home sits across two price bands, psychological pricing in this instance is yet another example of deviating from the round numbers set out by the portal, meaning that once again, not only does home end up sitting in just one price band, it also misses a large portion of our likely buyer pool!
To better understand this, let’s assume once again that our home has a market value of £1,850,000, only now we price our home from £1,750,000 to £1,749,999.
In this scenario, our home is no longer visible in the search results for the buyers within our likely buyer pool who are searching from £1,750,000 and buying towards £1,850,000 as the top of their price range.
In fact, our home will only be visible in the search results for those searching from any minimum price up to £1,750,000, or from £1,500,000 to any maximum price. Again, our home will end up sitting in just one price band!
Why from £1,500,000?
£1,500,000 is the closest price point available on Rightmove that is directly below £1,749,999.
Clearly, in trying to implement psychological pricing, we have ended up reducing our home’s visibility and exposure to buyers, especially those within our likely buyer pool!
For this reason, we are far better off sticking to £1,750,000, where once again, our home sits across two price bands!
Should we market our home on Rightmove or Zoopla, or both?
As mentioned earlier, Rightmove and Zoopla are the UK’s top two market leading property portals. Both portals can give our home tremendous visibility and exposure, as they’re the most relied upon resource for buyers who are looking for their next home. Choosing either portal to market our home is fine, but I’d personally recommend marketing on both portals to maximise our home’s visibility and exposure.
Also as mentioned earlier, the price points and increments differ between Rightmove and Zoopla. And so, you may be wondering, ‘how can I price my home if I choose to market it on both portals?’
We may choose to market our home on either Rightmove or Zoopla, or both. Whichever portal we choose, we should follow the price points of that portal. But if we choose to market our home on both portals, then it’s best that we follow Rightmove’s price points. For example, if we choose to price our home at £1,750,000, as that is the most appropriate price point available from Rightmove, then we should also price it at £1,750,000 on Zoopla.
Why should we follow Rightmove’s price points?
Rightmove is the market leading property portal, attracting around 2-3 times the traffic that Zoopla attracts, with Rightmove receiving around 80 million visitors per month, compared to Zoopla receiving around 30 million visitors per month. Rightmove will clearly offer our home the most visibility and exposure to buyers compared to any other portal!
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.
Despite our best efforts and depending on the market conditions, there may be occasions where a price reduction is indeed appropriate. Personally, I prefer to view such an approach as a market reposition, rather than as a price reduction per se, for reasons that I go into more detail on in the next section.
So if you’re interested in knowing about my thoughts on price reduction (or market reposition), come join me in the next section.