Choose your market, choose your margin.

Which market are you serving in your estate agency? Mass, Niche, or Luxury?

Contemporary urban furniture

If you haven’t read or watched anything by Daniel Priestly, you need to change that…

Whatever business or market you are in, becoming ‘Oversubscribed’, or becoming a ‘Key Person of Influence’, which are the titles of two of his books, are goals worth striving for! Needless to say, I’m a big fan…

One of his insights I found particularly useful concerns being intentional about what market you want to serve.

Is your estate agency in the Mass market, the Niche market, or the Luxury market?

He gives the example of…a skipping rope…go with me for a minute!

You can buy a skipping rope on amazon for £5.59. This is the Mass market. What margin is there here for anyone: once you factor in production, shipping, marketing and amazon fees this is a hard way to make a living… you’ve got to sell a hell of a lot of these.

More interesting is the Niche market, this is for specialist interest customers, and those earning in the top 20%. The example Daniel gives, is a crossfit skipping rope on sale for £100 from Rogue Fitness, 20x the price of the Mass market option. Obviously, a considerably higher room for a profit margin here! After all, it is still just a skipping rope.

Or… you could target the Luxury market, defined as the top 1% of income (which for UK readers are customers earning over £160,000 pre tax). Loro Piana charge £580 for an Italian made, cashmere and lambskin skipping rope. Daniel explains that it is normal for the luxury price to be 100x the price of the Mass market product…

Obviously, cashmere and lambskin components increase the unit cost of the product, not to mention the cost of the branding and marketing associated with the Luxury product. But I know which one I’d rather be selling!

Which market are you serving in your estate agency? Mass, Niche, or Luxury?

More importantly, what’s your profit margin for each house (unit) of sales?

If you are looking to increase your bottom line (and I’ve yet to meet anyone who isn’t!) I would urge you to consider what market you are targeting; which market has the appetite and the capacity to create the margin you’d want for your business at the price point their property deserves.

And at the same time consider the competition in your area – are there more agents fighting for the Mass market, the Niche market, or the Luxury market?

If you are interested in the facts, I would be happy to prepare some market analysis for you, free of charge and free from obligation, to help you decide the target for your business: we have software which does this for any area of the country, you can book a 30 minute zoom here: https://calendly.com/david-lindley-1/by-design-initial-call?month=2023-10

And lastly, I’d urge you to check out Daniel Priestly’s books, courses, and content – this article is taken from a YouTube video of his, which you can check out here if you like: https://www.youtube.com/watch?v=_jusuFjHwFg&t=44s

Until next month!

David Lindley.

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