What's the difference between real estate pricing target and pricing method?

As the saying goes, "there is no property that cannot be sold, only the price that cannot be sold." Price planning is the key to real estate marketing planning. With the end of shortage economy, the disappearance of group purchasing power and the gradual maturity of real estate market, reasonable price planning has increasingly become a prominent market fighting factor. Through the comparative analysis of real estate pricing objectives and methods, this paper looks for the laws that should be followed in pricing planning.

First, choose the pricing target.

Pricing target is the soul of the whole price planning. On the one hand, it should serve the marketing objectives of real estate projects and the business strategies of enterprises; On the other hand, it is also the basis of pricing methods and pricing strategies. Real estate pricing objectives generally have several different forms, such as profit maximization objectives, market share objectives, corporate image objectives and so on.

Profit maximization is the pricing goal of many enterprises. When the property is unique and difficult to be replaced by other products, it can be priced at the point where the marginal profit is consistent with the marginal cost. On the one hand, it can stimulate demand through sales promotion, and on the other hand, it can get the maximum profit through planned supply. Profit is a comprehensive index, especially for real estate projects. It often takes a long time from the beginning of pre-sale to the end of sales. Therefore, profit maximization is not a short-term pricing goal, but a long-term struggle direction for enterprises. Because the real estate pricing is influenced by the economic environment, many variables will increase the difficulty of pricing. Therefore, it is necessary to dynamically analyze the internal conditions and external environment of the enterprise, and not simply focus on the project profit, ignoring the market-related factors and the company's business strategy, otherwise haste makes waste.

Taking market share as the pricing target is a way of choosing with lofty aspirations. Market share refers to the share of an enterprise's real estate sales in the total sales of local market segments in a certain period of time. The high market share means that the company has strong competitiveness, indicating that the company has a more accurate and sufficient grasp of consumption information, and the real estate development industry occupies a lot of funds, and the scale economy phenomenon is obvious. The data shows that corporate profits are positively related to market share. Increasing market share is an effective way to increase enterprise profits. Beijing Urban Construction Group's super-large-scale comprehensive development of Wangjing Community in Beijing (population 300,000, building area 8 million square meters) can dilute the cost of infrastructure and public facilities, reduce the unit development cost, expand market share, and thus increase corporate profits. Generally speaking, growth companies are suitable to adopt the market share target, and achieve the purpose of changing quantity for profit and improving market position through the operation mode of small profits but quick turnover.

Winning the corporate image at a stable price is conducive to establishing the long-term advantages of the industry. The demand price elasticity of the real estate market is not great, but it fluctuates greatly due to other factors. The stable price gives people the impression that the product has a high reputation and the company operates stably. A good image is an intangible asset of an enterprise. Only by careful maintenance can we continuously create added value of products. Sun Hung Kai Properties has adopted the strategy of stabilizing high prices in the Hong Kong market, and its positioning as a high-quality and high-grade property has been gradually recognized by the market. Brand competition is a high-level competition, and the pricing goal of enhancing corporate image should be consistent with the long-term strategy of the enterprise. Leading enterprises with high market share should choose stable product positioning and stable price strategy.

Of course, in some special periods, enterprises also need to set temporary pricing targets. For example, when the market plummets, enterprises should take the sale at breakeven or as soon as possible as the pricing target; In order to meet the challenges of competitors, enterprises may also sacrifice local interests to contain competitors as their pricing goal. But once there is a turning point, the transitional goal will give way to other long-term positioning goals.

Second, determine the pricing method

Pricing method is a technical idea to determine the basic price range of real estate according to pricing objectives. There are three pricing methods of real estate: cost-oriented, competition-oriented and demand-oriented. Cost-oriented pricing refers to determining the price according to the proportion of development cost and artificial profit. Fixed costs are mainly static, based on all costs before and during the sale of real estate, plus expected profits as the sales price. Cost-plus pricing has obvious seller's market color. The variable cost pricing method sets the sum of unit variable cost and contribution of unit product as the sales price. Its theoretical basis is that only by reaching the cut-off point of sales profit and loss, contribution can not only make up for fixed costs, but also bring profits. When the property is facing a severe competitive situation, this method can crowd out competitors and seize market share in a short time. The breakeven method and the profit target method calculate the price floor that an enterprise can bear from breakeven and expected profit respectively. Because they are based on the predicted sales volume as a parameter and the sales volume is a function of the price, it is difficult to grasp the two interactive variables, and the prices they set are also difficult to meet the requirements of customers.

Competition-oriented pricing is a method to set prices according to the industry status and competitive positioning of enterprises. There are three specific methods: 1. Developers who are in the leading position in the regional market, with their good brand image and strong market mobilization ability, can make their product prices exceed the price level of similar properties. The high price is not only in line with its fine positioning market goal, but also in line with the pricing goal of maintaining the market image at a stable price. The representative works of Yuan Jun and Vanke Real Estate in Shenzhen residential market are that they entered the market at a high price of more than 10,000 yuan per square meter when the general trend tends to be dull, and achieved good sales performance and economic benefits. 2. For enterprises that have the strength to challenge leaders but lack brand awareness, it is appropriate to give visible discounts to buyers with better performance and lower prices. This can promote sales, expand market share and improve the reputation of enterprises in the industry. Using this method, it is generally necessary to carefully analyze the property of comparable leaders, borrow their prestige in promotion and highlight their own advantages. When Guangzhou Qifu New Village was launched, the famous Country Garden was priced by challenger, which soon became a new hot spot in the market. 3. When the real estate is launched, you can also choose the average price of similar real estate on the market at that time. It is generally believed that the average market price is the result of the balance between supply and demand. Market-oriented pricing will not only bring a reasonable average profit, but also destroy the order of the industry, so it is widely adopted by market followers. Although its pricing target lacks characteristics, it is a safe method for the real estate market with fierce competition, sufficient information and low demand elasticity. Especially suitable for buildings with weak product characteristics and general developer status.

Demand-oriented pricing is based on consumers' cognitive value, demand intensity and price tolerance, aiming at market share, brand image and ultimate profit, and really planning real estate prices according to effective demand. In practical application, there are two different forms: cognitive value and differentiated demand. The so-called cognitive value pricing refers to pricing according to the buyer's cognitive value of real estate under the buyer's market conditions. The formation of certification value is generally based on the buyer's comprehensive evaluation of tangible products, intangible services and the company's business reputation, including a series of processes such as the comparison between actual situation and expected situation, the comparison between pending property and reference property. A property with a good brand image can often get a high evaluation. As long as the actual pricing is lower than the buyer's cognitive value, that is, the value for money, the purchase behavior is easy to occur. The key to the application of this "consumer-centered" marketing concept is to fully communicate with potential buyers, master the survey data, and sort out and analyze it. The so-called differential demand pricing is to obtain the effective demand of each consumption level according to the demand intensity of different target customers and the overall capital affordability, and to determine the real estate price. This method can provide decision-making reference for formulating the overall price strategy of the project and the multi-level housing price system.

Different pricing methods require different conditions and will produce different results. Cost orientation is a "scientific management method" in the era of planned economy. Because it only sets the price on the basis of "knowing ourselves and knowing ourselves", it lacks understanding of the trading environment, counterparties and necessary conditions for transaction realization, so it can only set the price from the seller's interests and is not easy to match the market consumption demand. Competition orientation takes "winning in the race" as its business philosophy, pays attention to the relative price of the industry, and is closer to market supply and demand than cost orientation. However, the realization of the transaction depends on the coincidence of the interests of both parties. It is inevitable that the pricing will be wishful thinking if we only study how to locate the supplier reasonably and ignore the reaction of the buyer. Although the competition-oriented pricing method helps to formulate effective competition strategies and achieve sales results in a certain period of time, it ignores the important role of demand in price formation and often leads to "ineffective supply"; Demand-oriented pricing is to set real estate prices based on market demand, which can effectively stimulate potential demand and make real estate products fundamentally realize the possibility of trading. Moreover, it can make the real estate price "in one step", avoid the violent fluctuation of the price and reduce speculation. Cost-oriented pricing needs to accurately grasp the enterprise's own production capacity, competition-oriented pricing needs wise industry positioning, while demand-oriented pricing goes beyond the mindset of suppliers and seeks solutions from the interactive relationship between supply and demand.

Planners must firmly grasp the characteristics of the project, combine the company's operating advantages, conform to the real estate market, make overall plans and make rational choices in order to achieve good marketing results.