Post by shati106 on Nov 2, 2024 0:06:01 GMT -6
Sales strategies in conditions of uncertainty, a way to increase revenue in a real residential complex case, and advice to developers on how to implement dynamic pricing in their project.
Table of contents
Two Options for Sales Strategies in Conditions of Uncertainty
Which of these strategies will maximize revenue?
Case of residential complex "Syrup"
Given
Standard solution
Result after 15 months
How could it have been done?
4. Exceeding planned targets does not mean that there is no lost revenue
5. How to start using dynamic pricing in your projects
Dynamic pricing tools have long been used by social media marketing service developers in their work; we talked about pricing in development in this article.
How to build a sales strategy in 2023?
Conditions of uncertainty are the current reality. How should developers act if the cost of construction and demand for product groups change from month to month? How can the main goal be achieved - to obtain maximum revenue in a short time?
It is impossible to predict what will happen to the market, but you can quickly respond to changes and maintain a diverse range of products.
To do this, the developer must define a sales strategy for its own products:
Maintain the price of the lot, but lose sales momentum.
Maintain the sales rate, but reduce the price of the lot.
Let's look at the pros and cons of these strategies.
We maintain the price of the lot, but lose sales momentum :
+ Maintaining the project's planned revenue.
— Extending the sales period relative to the planned one will lead to an increase in the cost part. The projects will be handed over to the city, and the developer will be burdened with additional costs for housing maintenance and common house utilities.
— Decrease in competitive attractiveness. If competitors choose a strategy of reducing the price of a lot, there is a risk of losing a client.
— Lack of project financing and increased risk of increasing the % for using the Pension Fund*
*Project financing - hereinafter PF.
Note: when PF is issued, a schedule is generated according to which, when the escrow is replenished to certain limits, the % for PF is reduced. This schedule must be taken into account in sales. Sometimes the filling of escrow is accelerated, but there are also situations where the rate of filling is slowed down (for example, if the plan has already been fulfilled).
If the escrow is not replenished to the required volumes, both the PF % and the PF costs increase.
These costs are deferred, they will be known after the escrow is disclosed.
We maintain the sales rate and reduce the price of the lot :
+ Maintaining competitive attractiveness.
+ Increase in the number of potential clients.
+ Maintaining the security of project financing.
— Uncontrolled washout.
In the absence of mechanisms to control washout and overstocking, there is a risk of selling the most liquid product groups ahead of schedule. This will lead to risks in covering the cost of construction, loss of competitive attractiveness and marginality of the project.
— Unjustified underestimation of cost. It is important to understand that reducing the price per square meter by 20-40% will not lead to the maximum possible result. In this strategy, pricing should be based on actual sales, reservations, and interest in lots. Only in this case can we say that the maximum possible revenue has been received.
— Decrease in the planned revenue of the project.
Which of these strategies will maximize revenue?
According to DOM.RF, 85-90% of developers use project financing and escrow to ensure housing construction.
Accordingly, the strategy of maintaining planned revenue involves increasing the cost price by increasing the percentage of project financing, utilities, etc.
We assume that in the current state, this is an ineffective strategy already at the start. It can only be effective in synergy, when sales rates are also monitored. Therefore, we propose to analyze the effectiveness of the second strategy using an example - maintaining planned sales rates, but reducing the cost of the lot.
Table of contents
Two Options for Sales Strategies in Conditions of Uncertainty
Which of these strategies will maximize revenue?
Case of residential complex "Syrup"
Given
Standard solution
Result after 15 months
How could it have been done?
4. Exceeding planned targets does not mean that there is no lost revenue
5. How to start using dynamic pricing in your projects
Dynamic pricing tools have long been used by social media marketing service developers in their work; we talked about pricing in development in this article.
How to build a sales strategy in 2023?
Conditions of uncertainty are the current reality. How should developers act if the cost of construction and demand for product groups change from month to month? How can the main goal be achieved - to obtain maximum revenue in a short time?
It is impossible to predict what will happen to the market, but you can quickly respond to changes and maintain a diverse range of products.
To do this, the developer must define a sales strategy for its own products:
Maintain the price of the lot, but lose sales momentum.
Maintain the sales rate, but reduce the price of the lot.
Let's look at the pros and cons of these strategies.
We maintain the price of the lot, but lose sales momentum :
+ Maintaining the project's planned revenue.
— Extending the sales period relative to the planned one will lead to an increase in the cost part. The projects will be handed over to the city, and the developer will be burdened with additional costs for housing maintenance and common house utilities.
— Decrease in competitive attractiveness. If competitors choose a strategy of reducing the price of a lot, there is a risk of losing a client.
— Lack of project financing and increased risk of increasing the % for using the Pension Fund*
*Project financing - hereinafter PF.
Note: when PF is issued, a schedule is generated according to which, when the escrow is replenished to certain limits, the % for PF is reduced. This schedule must be taken into account in sales. Sometimes the filling of escrow is accelerated, but there are also situations where the rate of filling is slowed down (for example, if the plan has already been fulfilled).
If the escrow is not replenished to the required volumes, both the PF % and the PF costs increase.
These costs are deferred, they will be known after the escrow is disclosed.
We maintain the sales rate and reduce the price of the lot :
+ Maintaining competitive attractiveness.
+ Increase in the number of potential clients.
+ Maintaining the security of project financing.
— Uncontrolled washout.
In the absence of mechanisms to control washout and overstocking, there is a risk of selling the most liquid product groups ahead of schedule. This will lead to risks in covering the cost of construction, loss of competitive attractiveness and marginality of the project.
— Unjustified underestimation of cost. It is important to understand that reducing the price per square meter by 20-40% will not lead to the maximum possible result. In this strategy, pricing should be based on actual sales, reservations, and interest in lots. Only in this case can we say that the maximum possible revenue has been received.
— Decrease in the planned revenue of the project.
Which of these strategies will maximize revenue?
According to DOM.RF, 85-90% of developers use project financing and escrow to ensure housing construction.
Accordingly, the strategy of maintaining planned revenue involves increasing the cost price by increasing the percentage of project financing, utilities, etc.
We assume that in the current state, this is an ineffective strategy already at the start. It can only be effective in synergy, when sales rates are also monitored. Therefore, we propose to analyze the effectiveness of the second strategy using an example - maintaining planned sales rates, but reducing the cost of the lot.