vbc 2015 maximizing competitiveness presentation
TRANSCRIPT
verbasoftware.com(415) 738-2374VERBASOFTWARE.COM 415-738-2374VERBASOFTWARE.COM (415)
VERBA BOOT CAMP 2015
MAXIMIZING COMPETITIVENESS WITH DYNAMIC PRICING
Chris Porter
SPRING 2014
VERBASOFTWARE.COM (415)
DYNAMIC PRICING
‣ What is Dynamic Pricing?
‣ Where does it fit?
‣ How: Maximizing Your Recommendations
‣ When: Timing
‣ Takeaways
VERBASOFTWARE.COM (415) 738-2374
WHAT IS DYNAMIC PRICING?
Recommendations that raise the price of some
books, and lower the price of others, while
maintaining a margin of your choosing.
VERBASOFTWARE.COM (415) 738-2374
-1500
-750
0
750
1500
2250
3000
verbasoftware.com(415) 738-2374VERBASOFTWARE.COM (415) 738-2374
FALL 2014
Average number of price
changes on variants made
per client in Fall 2014
(6/15-8/31)
483
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V E R B A
V E R B A S O F T W A R E . C OM 4 1 5 - 7 3 8 - 2 3 7 4
D y n a m i c P r i c i n gV B C 2 0 1 4
~16%Percentage of acted upon price variants for the average catalog in Fall 2014
SPRING 2014
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WORKING RECOMMENDATIONS
Option 1: Accept Verba’s recommendation
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WORKING RECOMMENDATIONS
Option 2: Reject Verba’s recommendation and keep original
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WORKING RECOMMENDATIONS
Option 3: Set a manual price of your choosing
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WORKING RECOMMENDATIONS
Option 3: Set a manual price of your choosing
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DYNAMIC PRICING IN THE CYCLE
‣ Gather your adoptions ASAP
‣ Lower cost through Sourcing and Buyback
‣ When ready to price, choose target margin → price
effectively
‣ Price rentals
‣ Last stop before before shelf tags
VERBASOFTWARE.COM (415) 738-2374
CONFIDENCE METRICS
WHAT DETERMINES CONFIDENCE?
FOUR REQUIREMENTS FOR DYNAMIC PRICING
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GOOD DATA IN =
GREAT PRICING OUT
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V E R B A
V E R B A S O F T W A R E . C OM 4 1 5 - 7 3 8 - 2 3 7 4
D y n a m i c P r i c i n gV B C 2 0 1 4
PRICEYour current POS retail price before Dynamic Pricing
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V E R B A
V E R B A S O F T W A R E . C OM 4 1 5 - 7 3 8 - 2 3 7 4
D y n a m i c P r i c i n gV B C 2 0 1 4
COSTHow much you paid for your various ISBNs
Accounting cost (FIFO or LIFO) is one common calculation of cost
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QUICK NOTE ABOUT MARGINS
‣ Your “Current Margin” is the
margin of your term as it stands
‣ Your “Target Margin” is the
margin you wish to achieve
when pricing
‣ No Target Margin on New
Books
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WHAT’S YOUR STRATEGY?
Lower your costs, keep the same target margin
OR
Lower your target margin to stay competitive?
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VBC 2015
SALESThe "Projected Sales" figure much we expect you to sell.
Important data points:Est. Sales & Stock On Hand
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PROJECTED SALES BY VARIANT
Verba typically only gets one estimated sales figure
per ISBN. So how do we know what % of those are
new and used?
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PROJECTED SALES: BREAKDOWN
Scenario 1: If a new/used variant has a price of $0, Projected
Sales = 100% of estimated sales for other variant.
‣ New Price =$100
‣ Used Price = $0
‣ Est. Sales = 50
‣ New Projected Sales = 50, Used Projected Sales = 0
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PROJECTED SALES: BREAKDOWN
Scenario 2: We’ll use Stock On Hand and Est. Sales to
calculate Projected Sales:
(Estimated Sales) x (Variant On Hand ÷ Total On Hand) = Variant Projected Sales
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PROJECTED SALES: BREAKDOWN
Scenario 2: We’ll use Stock On Hand and Est. Sales to
calculate Projected Sales:
(100 Est. Sales)
x (25 Used On Hand ÷ 50 Total On Hand) = 50 Used Projected
Sales
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VBC 2015
INVENTORYYour stock on hand (new, used) as you receive books into your store
SPRING 2014
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INVENTORY IN PRACTICE
Bad Data Average Data Awesome Data
The more inventory received before pricing, the better….
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HOW DO I GET AWESOME DATA?
‣ Starts with early adoptions
‣ Earlier sourcing and more buyback
‣ Receive and invoice early and often
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What’s your strategy?
What do you do to invoice early and often?
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BEFORE: MONITOR YOUR PROGRESS
Stay current with your data as it updates:
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BEFORE: MONITOR YOUR PROGRESS
Stay current with your data as it updates in our system:
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DURING: MONITOR YOUR PROGRESS
‣ Heads Up Display in Dynamic
Pricing
‣ Follows you as you work
‣ Current margin updates in real
time
‣ Target margin is your goal
SPRING 2014
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WHEN SHOULD I PRICE?
‣ Minimum of 50% sales and inventory
‣ Wait as long as possible while still giving time to do things
in real world
‣ Waiting gives more data from you and marketplace
verbasoftware.com(415) 738-2374
V E R B A
V E R B A S O F T W A R E . C OM 4 1 5 - 7 3 8 - 2 3 7 4
D y n a m i c P r i c i n gV B C 2 0 1 4
What’s your strategy?
With all of this in mind, when are some obstacles?Tips for other users?
SPRING 2014
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TAKEAWAYS
‣ Get your adoptions ASAP
‣ Lower your costs!
‣ Know what data is most important (estimated sales, cost,
price & stock on hand)
‣ Receive and invoice early and often
‣ Take your data pulse often, before AND during Dynamic
Pricing
‣ Price as late as you can, as few times as possible
