

Ask HN: Which revenue route should I go down? - ceeK

Bit of background... I'm currently in the early stages of creating a new property directory focusing on student houses with added information such as internet speeds, distance to uni bus stops, crime in the area etc. It aims to address the dispersed nature of many different estate agents offering properties on lists which all represent data differently, combined with the complete lack of neighbourhood knowledge students have when venturing to a new city. Furthermore, I am a student trying to address the problem I had.<p>Now, the APIs for the added will cost money when the service scales. I'm currently having a dilemma of which revenue avenue to go down and am seeking some advice.<p>1. Charge the estate agents to list their properties. Whilst this may be a good bet, it could lead to a lack of value for students if the list represents only, say, 50% of the total properties available.<p>2. Charge the students for a premium version. Offer the standard aggregated lists free and charge for the added neighbourhood information. But, what price? And charging students may be an unsafe bet. Additionally, even with 2% uptake, the revenues from one university would be small.<p>3. Charge completely for the product. No free version, but perhaps a trial. Take up of the product may be reduced in such a case, however it could be marketed as having the advantage over other students in house hunting, thus representing more value.<p>4. Charge estate agents per lead. Not sure how I'd track this and again, if one estate agent didn't sign up, the property list would lose value.<p>I have a meeting with the largest student estate agent for my university on Wednesday, and would love some advice.
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rayhano
As the founder of a London-based property start-up, I'd advise reversing the
question: what are you offering the agent that is worth paying for?

Once you identify that, you can calculate how much it is worth to them.

For example, our auction allows agents to automate 'negotiation', so they can
focus on landlords and stop annoying tenants.

For a small agent, this is worth tens of thousands of pounds. For a medium
sized chain, it's worth hundreds of thousands in savings a year. For a large
landlord, the same.

So we charge a percentage of annual rent, as a transaction fee (rather than a
listing fee - our hypothesis is the listings/lead generation model is dying
and needs a bullet to the head).

Hope this helps. Feel free to get in touch; I'm on twitter @rayhanrafiq

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ceeK
Interesting suggestion. After putting it that way, I did a bit of rummaging of
the estate agents website. Combining their rates for landlords (7% of total
property revenue + VAT, the 'middle' option), with the data they have for
properties, I managed to give a rough estimate that they earn about £320,000
p/a on student properties. This doesn't count properties listed before January
or so, as I wasn't recording them and they're now gone.

Now, they have a 'No let, no fee' policy. Let's say they don't manage to let
10% of their properties, that's £32,000 of missed revenue. 20% and it's
£64,000. Obviously, I'm not sure on what the rate is, but if my student union
is anything to go by, supply > demand, so it's at least relevant. As such, my
service at least on the outset, aims to reduce this figure by funnelling
students into a central portal and quickly directing them to properties
available (availabilities are updated daily). Furthermore, I realise they at
least spend >£2000 p/m on advertising in the student newspaper. The service
also aims to eradicate this by becoming 'the' place to go for student
properties. By not having to advertise so aggressively, agents are left with
more resources to acquire new landlords.

Moreover, the top of the funnel starts with students who don't know where to
look for properties, are rushed, mislead and unfortunately hurried into
contracts. By having one site that deals with the whole process it becomes
simpler, more relaxed and students have the opportunity to browse all the
properties available. They get to find exactly the property they need.
Students are happier, properties are let quicker.

Given this information, what would you suggest? I don't wish to scare them
away as ideally I want all real estate agents in the area to sign up in order
to fully benefit students. I'd love to chat more if you're up for it, you can
catch me at c.k.howell (at) warwick . ac . uk

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shail
I would suggest flat fee from the estate agents and obviously encourage
apartment complex guys to post directly (you can offer discount to them) so
that you can remove middle men as much as possible.

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msrpotus
I'd recommend charging real estate agents (either per lead or listing). They
have the money and are used to spending it.

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t0
I'd like to add to this point. Instead of charging a flat fee, take a
commission from the apartment complex. You could even have all money pass from
the student through you as a sort of man in the middle.

Also, I'd be interested in working on this. I go to the 2nd largest university
in the US.

