VBC 2015 Maximizing Competitiveness Presentation

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.

-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

verbasoftware.com(415) 738-2374
V E R B A
V E R B A S O F T W A R E . C O
M
4 1 5 - 7 3 8 - 2 3 7 4
D y n a m i c P r i c i n g
V B C 2 0 1 4
~16%
Percentage of acted
upon price variants
for the average
catalog in Fall 2014

SPRING 2014
WORKING RECOMMENDATIONS

SPRING 2014
Option 1: Accept Verba’s recommendation

SPRING 2014
Option 2: Reject Verba’s recommendation and keep original

SPRING 2014
Option 3: Set a manual price of your choosing

SPRING 2014
OR… JUST USE THE EASY BUTTON!

SPRING 2014
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

WHEN ARE STORES DYNAMIC PRICING?

CONFIDENCE METRICS

WHAT DETERMINES CONFIDENCE?
FOUR REQUIREMENTS FOR DYNAMIC
PRICING

GOOD DATA IN
=
GREAT PRICING OUT

V E R B A
M
4 1 5 - 7 3 8 - 2 3 7 4
V B C 2 0 1 4
PRICE
Your current POS
retail price before
Dynamic Pricing

V E R B A
M
4 1 5 - 7 3 8 - 2 3 7 4
V B C 2 0 1 4
COST
How much you paid for
your various ISBNs
Accounting cost (FIFO or
LIFO) is one common
calculation of cost

(PRICE - COST) ÷ (PRICE)
=
YOUR MARGIN

($100 - $67) ÷ ($100)
=
33% MARGIN

SPRING 2014
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

WHAT’SYOUR STRATEGY?
Lower your costs, keep the same target margin
OR
Lower your target margin to stay competitive?

verbasoftware.com(415) 738-2374VERBASOFTWARE.COM (415)
VBC 2015
SALES
The "Projected Sales"
ﬁgure
much we expect you to
sell.
Important data points:
Est. Sales & Stock On
Hand

SPRING 2014
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?

SPRING 2014
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

SPRING 2014
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

SPRING 2014
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

verbasoftware.com(415) 738-2374VERBASOFTWARE.COM (415)
VBC 2015
INVENTORY
Your stock on hand
(new, used) as you
receive books into
your store

SPRING 2014
INVENTORY IN PRACTICE
Bad Data Average Data Awesome Data
The more inventory received before pricing, the
better….

Bad Data

Average Data

Awesome Data

SPRING 2014
HOW DO I GET AWESOME DATA?
‣ Starts with early adoptions
‣ Earlier sourcing and more buyback
‣ Receive and invoice early and often

What’s your strategy?
What do you do to invoice early and often?

SPRING 2014
BEFORE: MONITOR YOUR PROGRESS
Stay current with your data as it updates:

SPRING 2014
BEFORE: MONITOR YOUR PROGRESS
Stay current with your data as it updates in our system:

SPRING 2014
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
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

V E R B A
M
4 1 5 - 7 3 8 - 2 3 7 4
V 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
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

SPRING 2014
‣ chris.porter@verbasoftware.com
‣ (415) 738-2374

VBC 2015 Maximizing Competitiveness Presentation

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VBC 2015 Maximizing Competitiveness Presentation