Offering just one retirement village contract – meaning one set of financial terms – is dying.
An emerging group of operators now have three contracts they offer, being a low entry fee and a 100% DMF, a traditional DMF contract (30 to 35%) and a negotiable entry fee/DMF contract.
Another alternative being tested is a rental contract with an entry fee, higher monthly payments and no DMF.
Why is this happening?
First up, with village homes becoming more expensive and attracting wealthier residents, savvy customers and investment advisers are looking for ways to protect tax-free pension income by negotiating a higher entry fee and lower DMF.
And second: today’s retirees are demanding ‘choice’.
For we marketers this is a huge challenge on three fronts.
One, as marketers we have to work out the pricing models that will work in the forever changing marketplace.
Two, we have to provide the tools and training (and faith) with our salespeople to tailor packages for individual clients and properties, negotiating each client one by one.
Three and perhaps most importantly, we have to safeguard the long-term value of the village by ensuring the pricing maintains the present and future value of the individual contracts.
Think about this last point. The DMF contract is the value of the village. When we start playing with the future income – say 10 years out – that has ramifications on the value of the village today. One mistake could cost millions.
Informed marketers are now engaging people like Village Gurus to do the modelling. Check them out HERE.
Also check out the new Macquarie University retirement village calculator released this week. Check their media release HERE.
It is still shaky, but it intends to allow consumers to compare the cost of village contracts on the basis of monthly cost of residency. For example, over seven years it would cost you $1800 a month to be in Village X compared to $2200 a month in Village Y.
A sign of the new world for marketers!
