Deciding what to spend on sales and marketing for a new development can be a daunting task. Taking a big picture approach of key financial numbers for the project and then working through the details makes considerably more sense than putting together a wish list of an advertising and promotion plan that may overshoot budget.
It's important to work from a holistic, number-driven approach and set up spending limits and performance measures for gauging results.
First look at revenue or sales projections and break these down into realistic assumptions such as the pace of sales – that is, how many units you expect to sell each month. It's wise to compare your per square meter selling prices with a competitive set of properties already in the market.
Also verify whether your projection is realistic by comparing the sale rate of competing products and factor in other considerations, such as seasons, that can affect sales over the course of a year.
There are more visitors coming in the tourist season but property sales are highest when a certain profile of visitors are on the island including higher net worth individuals and strong representation from Hong Kong and the UK. Historically, more sales are from October to April though this trend varies for upper tier luxury properties.
Sales and marketing expenses include commissions paid in-house and to outside agents, as well as sales staff costs and all advertising, promotions and marketing of the project. While there is no industry standard percentage of sales and marketing expenses, expenses are most often expressed as a percentage of total sales?
Local trends in medium to high end condominium, town house and villa development aimed at overseas buyers show that sales and marketing expenses are usually about 10 % total sales.
Internal and external commissions reach about 5% of total sales, and incentive schemes with higher rates paid according to a progressive scale are more common among the larger agents.
Significant components of the expenses, budget will be print advertising; e-marketing – including Website, on-line banners, “pay-per-click” and direct email; tradeshows and exhibitions; point of sale material; billboards; entertainment and sales offices expenses and public relations.
These costs should be broken into line