A new era is born for MLSs delivering technology solutions to their subscribers: Tiered Pricing.
What do I get from My MLS/Association?
Service levels offered by MLSs across the nation vary widely. Some MLS offerings are as minimal as a base MLS system, rules enforcement, and a RETS server. No training or help desk (vendor does that); no tax system, just a core MLS.
Minimum Service MLS: This is really not as minimum as it sounds. MLS systems today are feature rich and have many necessary features that come standard like: CMA; User defined Hot Sheet; Roster; Prospect Management & Consumer Property Alerts; Mapping and Driving directions; Basic Report Writer; Basic Statistics; Messaging System; Reverse Prospecting; and crappy wireless.
Full or Premium Service MLS: Some MLSs go all out in terms of services included in your base MLS fees and include premium services like: Help Desk; Training; System Security; eMail; Integrated Tax; Showing Solutions; Market Statistics; Virtual Tours; Agent Websites; IDX; Fax; Transaction Management; Document Management; Electronic Signatures; Forms; Data Sharing; Appraiser Tools; MLS Consumer Website; iPad MLS; mobile MLS; AVM; Listing Syndication; VOW website; Single Sign On; Agent Ratings; and more.
Need for Tiered Pricing
Depending on the agent, their need for MLS services will range from basic to everything. Although in truth, most MLSs offering full service only see a 5% penetration rate for many of the premium services.
Sidebar: Savvy MLSs do not buy licenses for all subscribers; rather they purchase licenses for agents who adopt and use the product. This is a primary reason why MLSs may want to only provide single sign on to products that are licensed to all members. Having agents sign up for premium services limits the number of licenses the MLS purchases to only those agents that use the service. Audit logins and remove agents who have not signed in a year or who have left the industry.
The reason why MLSs have flat service levels and flat fee structures today is because it is easy – one fee for everyone makes billing simple. It is also the way it has always been (legacy fees from old Association days with listing books). Additionally, the laws of large numbers apply. In many cases, the license fee for offering a service to the entire MLS is about the same as licensing a product or service for 10% to 25%; sometimes more or less.
Demand for Basic Services
There are two groups of people that would likely be most interested in Basic Services: Agents who have not recently sold anything and Brokers who already offer similar services.
Tough Time Agent
In most MLSs today, 40% to 50% of subscribers have not represented a party in the purchase or sale of a home in more than a year. Those are the subscribers that deter expansion of services and innovation in the MLS because they do not want fee increases for services they do not uses. A tiered structure will remove this rebuttal by keeping fees low for that group of subscribers.
Old Fashioned Agent
There are piles of agents who do not embrace technology in real estate. They have gotten along just fine without electronic innovation and have developed a client base that appreciates the way they conduct their transactions. They do not plan to adopt premium services and do not want to pay for them to dollar cost average agents that do.
Tech Savvy Broker
Another group that is interested in basic services in your market may be large brokers. Like the MLS, most large brokerages offer agents tools which include agent websites, IDX; Lead Management; Listing Syndication; Market Stats; CRM; CMA; Marketing Suites; IPad Solutions; Mobile Solutions; Transaction Management; Digital Signature; et al.
You can appreciate why a broker who is purchasing these solutions and customizing them to create unique service levels of their business would not want to support the MLS leveling the playing field. If those brokers were offered a basic service tier pricing, they would not feel like they are duplicating payment for duplicate services.
Tier Service Alternatives
An alternative to Tiered subscription levels is offering premium service a la carte. Maintain the basic service level for all subscribers and charge premiums for premium services on an a la carte basis.
MLSs and Associations make a natural place for premium services to be offered through a marketplace. Let agents and brokers who want additional services to buy them online. This is the principle thesis behind new service offerings from FBS (Spark), Clareity Security (Application Store), and RE Technology (Success Store).
It would seem that this is an absolute “must” and “no brainer” for every MLS, because most every business has some degree of tiered pricing based on service level agreements, optional features, etc. I believe the Brokers would embrace this approach in a huge way, particularly since it would allow them to really differentiate themselves from other competing Brokers. Will definitely be watching how this develops.