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This is a real estate website where agents can advertise their properties. Two years ago we've started as a FREE service to gain customers and visits. Now after a lot of investment we need to start charging for the service at least a part of the customers.

The problem is that they have very few leads per month so if we ask them for a fixed monthly fee most of them would probably decide to cancel their account and we will lose them.

The website produces leads but not enough to give enough value for every customer.

We are currently trying to increase our organic traffic from search engines that will mean an increase in our leads but this takes a lot of time until it will be enough.

In the meanwhile we don't know wich would be the best way to treat our customers so they can have results and be happy while we are happy for charging something for the service.

Our current policy for the old customers is: From September everyone must pay a monthly fee based on the quantity of properties published.

For the new customers: They get 3 months for free and then they will be in the same situation as the old ones.

But with this policy I think nobody, or very few will actually accept to continue.

I was thinking in allocating 50% of the income from the monthly fee of every customer to advertise only their content on PPC like Adwords and so. That way, if they pay they will get more results. But how do I convince them that they will get more if they pay if until now they have got very few results?

Most of our competitors use the model: first you pay, then you can use the service. I have also seen other models like:

  • Publish as many properties as you want for free but pay a PRO account if you want more leads
  • Publish everything free and we make money from other ads (basic classifieds website)

Our current product/services is/are:

  • Register and advertise all of your properties
  • Import them all from a XML file
  • Auto advertising on our main website and also on our secondary websites (5 more with low level of visits)

Our competition also offer this paid products:

  • Highlighted ads
  • Highlighted profesional in your area
  • A website if you don't have

Here we are having trouble deciding on what kind of business model we should follow and in what activities we should invest to bring more value for our customers. I am now about to cancel a few old paid accounts, lose them as customers and lose the content they have published.

If anyone with experience in this kind of business can give me some advices to make this work, I will remain grateful forever.

PS: We have no marketing guy on the phone right now until we have a clear vision of our business, and because we want to try to do most of the sales online trough the website.

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2 Answers

up vote 1 down vote

It seems to me that you are making the classic mistake of focusing on your own problem.

You've created a service that generates value. The value is driven by usage. But there's no (or insufficient) revenue. So you need income. So you want to charge. So you'll lose users. And then...

The strategy of introducing charging and then seeing what happens is high risk. Maybe it's the only viable choice. But then maybe it's not. So unless you're at crisis point, I would hold back on this decision.

I suggest you focus on two things.

First, build up the richness of your data and analytics. Use of your site contains value.; You're focusing on what you already give away: leads. Yes, that's the obvious place. And yes, that's high value. But you've educated your users that on your site, leads are free.

So, for instance, what can you learn from site users. What are the ads that don't get a response? Can you correlate listing placement, characteristics of the ads, visual features etc with clicks and inquiries? Some of this is data you're either not capturing, or not capturing in a useful form. But it all contains potential value.

Going back to a real-estate agent, not to ask for money for what's been free, but to show some insight into their business, and offer a free trial of a paid service designed to help them improve the results - that's a richer conversation.

Second, engage the site's users. At the moment, you are saving them the trouble of looking through multiple individual listing sites. But maybe there's more they want - or more they are getting from you that you don't yet realize.

Yes, it will be good to monetize with your present clients. You're offering them value, and the way things stand, you're not enjoying your share. But if you think about the wider value in your site, a significant part of it is the site visitors themselves. Build on the benefits they are finding by using your service, and you will very likely find other income streams you haven't thought of yet - and of course, it's easy for you to make other types of client (legal services, for instance) chargeable from the get-go, because you already have an established site, and there's no conflict with existing agreements.

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up vote 3 down vote

Charge your customers by the lead, not by a monthly fee. They will clearly see the benefit of that- they pay for leads.

This gives you the incentive to make your site generate more leads for them.

How much money to charge depends on numerous variables. Where are you located, how valuable are your leads, what is the real estate market like there? In the Chicago area some realtors will pay past customers $100 to $200 for referring people to that realtor once the referral buys a house. See if your realtors do the same type of thing and work backwards to figure out what that lead is worth. (Charging a fee based on a sale would be difficult for you to track.)

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What should be a fair price per a lead? I think I will try this method as an alternative for people who don't want the fixed monthly fee. – Alexandru Trandafir Catalin Sep 6 '12 at 21:29

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