REA Price Freeze on Subscriptions?

This is unconfirmed but word from our REA rep is to expect an email out very soon about a price freeze on subscriptions. The sales team were advised today but the details are a little sketchy. It looks as though it might be a price cap rather than a freeze so if you were on lower rate (ie. you signed a 2 year contract just falling due) you will not be frozen at that lower rate, but more likely  be brought up to the current prevaling rates.

More details when we can confirm it.

This seems very unusual given their recent prices rises to their add-on products only 2 days ago.  Maybe REA took to heart what Peter said in his post about 5 Things That Will Not Happen in 2009

If it turns out to be true it is fantastic news and something many of us thought that REA would not do.

EDIT: That Did Not Take Long…  Only had to wait 5 mins for the email to arrive.  Here is a copy of the email

realestate.com.au freezes agent subscription prices until 2010

Dear Agent,

I am pleased to announce that realestate.com.au is freezing residential subscription prices until February 2010*.

The decision to freeze subscription prices follows consultation with many of our members, who have expressed that this is a time when the industry needs assistance to boost real estate activity.

We recognise that many of you may face a tough year and we want to support the industry by making it easier for you and potential vendors who are considering selling a property this year.

This announcement also coincides with a record 4.83 Million people visiting realestate.com.au in January, highlighting that there is still a growing online audience of people researching real estate agents and properties for sale**.

Australian real estate agents spend $1.1 billion each year on real estate advertising including print and online, with 12% being invested into online advertising`. With nine out of ten people researching property online#, and a reported 40% of enquiries being generated from online advertising^, we believe that advertising online continues to be the most
cost-efficient and effective advertising medium for you and your vendors.

Our decision to freeze subscription prices will help to ensure that you continue to benefit from the high return on investment that advertising on realestate.com.au delivers.

realestate.com.au last raised our prices on 1 September 2008*. Please note: for agents that are on pre-September 2008 residential subscription prices, your subscription price will be brought into line with the September 2008 rates at the time of your renewal.

If you have any questions, I encourage you to speak to your realestate.com.au Account Manager, contact our Customer Care Centre on 1300 134 174 or email reainfo@realestate.com.au

Yours sincerely,

Jamie Pride
CEO Australia – realestate.com.au

Realestate.com.au, subscription fees

SEO For Real Estate
Listing Leads
Agentpoint Real estate

About Glenn Batten

Glenn Batten is the General Manager at First National Real Estate Nerang and Principal at the First National Real Estate Upper Coomera office and has over 20 years real estate experience and a passion for technology. Glenn has been writing from an agents perspective on industry issues and covering a range of topics on Business2 since 2007.

20 Responses to REA Price Freeze on Subscriptions?

  1. Peter Ricci February 3, 2009 at 2:58 pm #

    In other news Glenn will not cut and paste from crappy non standards compliant MS office code into WordPress 🙂

    Sorry for that readers, it is now fixed.

  2. Glenn Batten February 3, 2009 at 3:00 pm #

    Bloody Outlook 🙂

    So Peter.. did you ever think you would have seen the day?

  3. Robert Simeon February 3, 2009 at 3:44 pm #

    Better known as damage control or should that be damage and reputation control.

    They forgot another announcement that their servers are exceeding expectations and performing much better than past experiences as they now have a maintenance schedule in place to replace the rubber bands on a fortnightly basis 🙂

  4. John Newman February 3, 2009 at 3:48 pm #

    Hi all,

    Firstly I work for myhome.com.au, long time reader, first time comment!!

    Glenn, ok, so no residential subscription increase till the beginning of 2010 by REA. At least agents now know that they won’t be paying any more for their subscriptions for 12 months, but what about the “add ons”?

    I assume that you recent article “REA kicks agents in the guts with a 45%+ pa increase” for e-brochures, top spot, banners, etc, still stands, is that correct??

  5. Glenn Batten February 3, 2009 at 4:12 pm #

    John,

    There were sneaky that way. Hide the increase in marketing newsletter sent out last thing on Friday giving 1 or 2 days notice which is over a weekend, provide the actual details of that increase behind a login and password that most agency owners do not use or have access to.

    But when they freeze subscription fees it gets yelled from the roof tops by the CEO and all the details are provided in the emails. Sounds like somebody with PR experience handled that… (Hi Dave!).

    A sleight of hand if you will, take a little away with one hand whilst your giving with the other. Thankfully the subscription feed will effect far more people though.

    What this does is it will bring everyone in on the same payment level. It must have been hell to manage with so many people on different levels. Apparently it was possible that if you came off a 2 year deal recently and signed with a new one year deal only that the subscription price had increased by 45%. It also gave way to people thinking others were getting sweatheart deals.

    The get to look like the good guys giving back a little, they clean up there subscription differences and anybody on the low amount, which would have to be a fair few have to come up to the current rate anyway. You would have thought that was an easy decision to make.

    It will be interesting to get feedback how everyone sees it. Whether its looked at in a good light or considered too little too late. I for one think it is a good gesture because it is so far removed from what they have done in the past.

  6. Robert Simeon February 3, 2009 at 5:21 pm #

    Got it ! A leopard changing its spots 🙂

  7. Glenn Batten February 3, 2009 at 5:29 pm #

    I would not go that far Robert.. Maybe dropped the spots a shade or two.. but they are still very dark, and definitely not gone 🙂

  8. Peter Ricci February 3, 2009 at 6:38 pm #

    We have to give them credit, REA as a company should be able to hold steady with revenues and profits – even after this announcement. This is a far cry from most companies.

  9. Paddy February 3, 2009 at 7:38 pm #

    From the outset, it would appear that this announcement of “Freezing residential subscription prices until February 2010” is a good thing.

    However, has there really been a change to the historical raising of subscription fees annually?

    Traditionally, REA has announced a price increase every Jan/Feb.

    Didn’t REA announce a price rise in Jan/Feb 08 and again in Aug/Sept 08?

    This equates to two (2) price rises within a calendar year, yet only one price rise in the Financial year (07/08).

    For REA to come out now in February 09 saying that there is no price rise on subscriptions until 2010 does not mean much to shareholders, as within this current financial year (08/09), there has been a price increase already. I just occurred earlier than usual, and was in Aug/Sept 08.

    For agents, from a financial year calendar frame, there is still a price rise.

    It appears it is all about when you go to market, and how you cut/communicate the numbers.

    No good news here, and nothing to be thankful for.

    Or is this an early April Fools joke on us all?

  10. Andy February 3, 2009 at 9:27 pm #

    Hmmm, aren’t they about to slug agents for a separate fee of $275 or some such for holiday rentals in addition to residential due to making holiday rentals separate – give with one hand and take with another…..a smokescreen to hide the real increases…..

  11. Paddy February 3, 2009 at 10:02 pm #

    Andy, I think you are right.

    So to be clear of what we know:

    1. The Feb 09 price rise came early, and was implemented in Aug/Sept 08.

    REA then come out in February 09 and say that they will not increase subscription prices until 2010 – which just happens to be the time that they would put prices up in normal course of business.

    2. Feb 09, REA put up the prices of their add-on products. They make it more difficult to find out the details of this price rise, than their announcement of a price freeze for subscriptions.

    3. REA is about to commence charging for their holiday site.

    4. So far, the normal monthly data charges remain.

    5. There is scope for them to increase the prices for their commercial site, and other sites.

    6. Many agents are experiencing a lower ratio of REA UB’s: REA Emails – so whilst this performance measure is going in reverse you are paying more.

    Interestingly, if you think you are experiencing lower than normal inquiry from REA, they have a product (ebrochure or something similar), which they can send out to drive more enquiry. At a cost of course – which has just been increased!!!

    All of this activity says Price Increase – not Price Freeze.

    What could they do to not put up prices?

    Reduce costs? Sure, get rid of Ninemsn and Hubonline.
    Find new revenue? like sell data – sure, like they do to RPData and probably others.

    But the prices still go up, whilst key performance metrics such as number of email leads: UB’s decline.

    It makes you wonder if Jamie Pride was listening to his customers and their needs.

    Astounding marketing spin which is coming out of REA.

  12. Glenn Batten February 4, 2009 at 9:25 am #

    Paddy,

    You have summarised the issue nicely..

    realestate.com.au was going to be two prices rises over the past 12 months. In September and February. They have chosen to not proceed with February’s price rise. That is a concession they have given, albeit a small one. Really they just dropped back to their normal level of subscription growth rather than what they were going to do.

    I guess my point is that they did choose to not proceed with the February price rise. Last week did you really think that they would do this… ?? I know I didn’t.

    For that reason I think its a good move. The move is only a fraction of what they are claiming it to be, but it is in the completely opposite direction. A change of direction!

    Think about the glass being 1/10 full, not virtually empty 🙂

  13. Trevor February 4, 2009 at 9:50 am #

    So, has anyone called their realestate.com.au rep yet and asked for an expanation of all that has been noted in the comments so far? I can assure you, I’d have been inundated with calls if we’d done something here that our agents didn’t like or felt uncomfortable about.

  14. Trevor February 4, 2009 at 9:51 am #

    Sorry, best I repeat my disclaimer (provided on an earlier post). I work for the St George & Sutherland Shire Leader – a Fairfax Community Newspaper.

  15. snoop February 4, 2009 at 11:23 am #

    Re the holiday rentals comment
    My agent slugs me advertising for mine so why shldnt rea charge the agent??
    The wider debate here is should agents make a margin on listing properties on the portals?

  16. Sal Espro February 4, 2009 at 1:38 pm #

    REALESTATE.COM.AU ARE RIP-OFF MERCHANTS!
    While we’re on the REA fees band-wagon:
    How can REA continue to get away with charging $25 pm for XML ‘uploads’ from service providers (who by the way are helping REA out in this way!). Does anyone know whether Hubonline (owned by REA) clients also pay this? Domain doesn’t charge it!

    Grrrr…..

    REALESTATE AGENTS ARE RIP-OFF MERCHANTS!
    Ps Snoop; in Vic agents have to state all ‘kick-backs’ gained from media and if not then these must be passed-back to the client.
    However, this isn’t policed
    as Fairfax’s ‘The Age’ newspaper pays for billboards and other co-branded advertising/marketing. e.g. The the large clock branded ‘The Age’, on the front of the Castran Gilbert (agency) window in Toorak Rd and huge Kay and Burton billboard co-branded ‘The Age’ on Malvern Rd.
    These are very costly investments on an ongoing basis by The Age and I doubt whether the agencies involved rebate their clients for these (despite it being the clients fees that purchased the advertising in The Age).

    Grrr…..

  17. Paddy February 5, 2009 at 2:54 pm #

    What is disappointing to conclude, is that REA suffers from corporate greed, focusing on Revenues and share prices over customers. Seems reminiscent of the foundations of the Global Financial Crisis.

    Glenn, you must have better information than I do, as I was never aware that REA decided to put up subscription prices every 6 months. When did they send that gem out? Was it hidden in behind logins as well?

    The skeptic in me thinks that REA just brought forward the normal Jan/Feb 09 price rise to Aug/Sept 08, as they knew that would be their only chance of putting in a price rise given the market conditions. They then just try to manage the message by using flashy terms such as Price Freeze, as these are all in vogue at the moment.

    When you think about it, what company in their right mind would decide in mid year to implement a price rise every 6 months, whilst before them some of the largest financial institutions in the world were going bankrupt and the US housing Subprime crisis was evolving?

    If Glen is right, then they were planning 2 price rises a year on subscriptions, whilst the global economy was starting to crumble. If my skepticism is right, it is all just manipulation of agents, and another annual price increase.

    In either instance, the situation is perverse!

    If REA were serious about every agent being on the same rate, then what about the large groups which get considerable discounts? Shouldn’t they be made to pay the same rate as everyone?

    How much discount does Ray White receive?

    What is the point of touting everyone is brought up to line on the current price, if some agents are getting a better deal than others?

    Snoop, if your agent currently charges you for listing your holiday rentals now, then it is probably to cover the costs of the current subscription pricing for REA. Imagine how much you will be charged once your agent has to pay for a separate subscription for this holiday subscription.

    In this market, it is up to you to negotiate with your agent as to what you will pay for marketing. However the issue at hand here is that the cost of marketing online keeps increasing, whilst the effectiveness, in some instances, is statistically going backwards. At the end of the day, if your agent has increased costs, this will trickle down to you in some form or another.

    If the institutes are worth anything, they will be calling meetings with REA to find out how to get the best result out of recent announcements for their members and then advising accordingly.

  18. Sal Espro February 5, 2009 at 4:13 pm #

    Hi Paddy,

    Re your, “If the institutes are worth anything, they will be calling meetings with REA to find out how to get the best result out of recent announcements for their members and then advising accordingly.”

    This is pretty difficult when the institutes have a vested interest in their own (useless) portals!! (Such a pity that they had the first national portal with property.com.au but a handful of influential agent numbskulls pushed it away saying the institutes had no right paying for such a commercial venture – despite owning printeries etc etc. Makes you wonder how close Fairfax was to their pockets at the time – ah, the good ole days when media commish was really worth sometin).

  19. Paddy February 6, 2009 at 12:51 pm #

    The motivations behind the REA Price Freeze/Price Increase – the Price Freeze you have when the prices go up – become clearer after reading New Corps Quarterly results:

    http://www.abc.net.au/news/stories/2009/02/06/2484003.htm

    News Corp posts a loss of $9.7 billion, with newspaper revenue in Australia down 18%.

    With these results, News would have been instructing all of its companies to maximise revenues – hence we now see why REA put up the Price on all their add on products, and put a subscription price rise in late 08, when it was not due until early 09.

    Get the money in fast, and by any means.

    With Rupert signaling staff cuts, REA might find it difficult to drive innovation, therein providing extra value for the recent price increases.

  20. Phillip March 4, 2009 at 10:50 pm #

    When A Price Freeze Is Not A Price Freeze

    We have received our new contract from realestate.com.au. Depsite the recent price freeze announcement, our new contract increases our fees by over 11% when our contract expires this month (March 2009).

    The price freeze announcement says “realestate.com.au last raised our prices on 1 September 2008*. Please note: for agents that are on pre-September 2008 residential subscription prices, your subscription price will be brought into line with the September 2008 rates at the time of your renewal.”

    So our fees are going up this year and again in March 2010 as the so called freeze expires in February 2010. In summary, our fees are going up in March 2009 and again in 2010. That is not a price freeze. I wonder how many customers are actually receiving the price freeze ??

    They must think we are a very gullible bunch.

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