A former hybrid agency CEO has questioned the decision by HouseSimple to start offering its service to vendors for free in the hope of gaining revenue from selling them third party financial, legal and insurance services.
Russell Quirk of Properganda says his experience at eMoov suggests HouseSimple will only monetise at best 20% of their free listings, and claims the company’s new model ‘smacks of desperation’.
“HouseSimple were always the ones who were keen to perpetuate this race to the bottom,” he says.
“Going free like this demeans the industry by taking that race to the bottom to new lows.
“If you are too cheap then you are perceived as not being a good enough service as far as the consumer is concerned, even if that may not be true.”
Quirk (left) says going free in an attempt to grab market share and overtake Purplebricks and Yopa may be bold, but it’s a ‘massive mistake’.
“Not only does it not resonate with the consumer, but it doesn’t make financial sense – HouseSimple have over 100 employees, are spending money on tech acquisition, and are likely to have a portal bill of £100,000 a month.”
It has also been revealed that HouseSimple have been trying out their free model in the Granada TV region for several months to see if it works.
“If anyone took this model to a venture capital firm now and said ‘we’re going to be free, we’re only going to monetise a fifth of our listings, take all the money from third parties and we’re going to be revenue free for six months, then you would be laughed out of the room,” says Quirk.
“It’s a misguided endeavour to do something different.”
He also argues that when a vendor has ‘skin in the game’ by default they are more motivated, but when the service is free, only ‘bottom feeders’ and tyre kickers will be attracted.