REA ‘fairly far down the path’ of market-based pricing

Australia’s largest portal has said it wants to minimise complexity for agents as it moves more and more of them onto market-based pricing.

REA Group chief executive Tracey Fellows told an investor briefing that is now “fairly far down the path” of linking the ad price to the property value.

“Customers who have now moved onto our current contracts are on market-based pricing,” she said.

“That rolled through during the year, and so anyone who’s moved onto those flexible contracts is on market-based pricing.”

Ms Fellows said that will freeze its prices until January 2016, at which point it might make changes based on market conditions.

However, Ms Fellows said that the portal couldn’t foresee a day when it introduced a pricing model that was fully dynamic.

“We think for our customers – and that was one of the learnings that we took from last year – that we don’t want to introduce complexity for our customers’ businesses,” she said.

“And so we want to get that right balance of pricing to the market and the different variables of the market, but also creating something that’s workable for our customers.”

Investment analyst Morningstar forecast earlier this year that REA Group’s move from a subscription model to a fee-for-listing model would help drive strong revenue growth.

Morningstar forecast revenue growth of 20 per cent in 2015-16, 16 per cent in 2016-17 and 15 per cent in 2017-18.

REA Group reported large revenue gains in its 2014-15 results, with underlying revenue up 19.5 per cent to $522.9 million and headline revenue up 26.7 per cent to $554.2 million.

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