The mathematics of dynamic pricing

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Lew Worthington | Forum Activity | Posted: Sat, Sep 10 2016 8:55 AM

I will probably be buying some L7 base package that includes the works of Philo (now listed for $139.99). These Philo resources have just gone into processing after I bought them via Community Pricing for $27. How much less are my base packages after dynamic pricing because I will own the works of Philo versus if I did not own them? The translation between dynamic pricing and the cost I pay for something has always seemed a little mysterious to me, mathematically.

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Fred Chapman | Forum Activity | Replied: Sat, Sep 10 2016 9:19 AM

The best way to determine what you dynamic price will be is to select a base package (or compare packages of interest) on the logos web site. Your dynamic price will be calculated automatically. 

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Mark Barnes | Forum Activity | Replied: Sat, Sep 10 2016 9:41 AM

Lew Worthington:
The translation between dynamic pricing and the cost I pay for something has always seemed a little mysterious to me, mathematically.

I've posted previously about exactly how dynamic pricing works. There's been a very slight tweak since then, but the principle still applies.

Mark Barnes:

This illustration might help.

  • Imagine a product that bundles ten resources and sells for $250.
  • Five of the resources are valued at $20, three at $40 and one at $100. The total value of the bundle is therefore $340.
  • You already own two of the $20 resources, one of the $40 resources, and the $100 resource. The total value of what you already own is $180.
  • You therefore own 53% of the bundle (180/340).
  • You therefore receive a 53% discount on the bundle price of $250. So you pay $117.65 for the bundle.

When working out your discount, it doesn't matter what you paid for the resources you already owned. You may have even picked them up free. All that matters is what Faithlife value them at. That value is the usual price the product sells for.

FWIW, I would guess that the works of Philo will only reduce your base package costs by approximately $11 to $21. You'd be better off cancelling your bid.

(The logic on Philo is that base packages are priced at a discount of around 85% to 92% on the cost of buying everything separately. So everything you buy, you're only paying 15% to 8% of it's real value. On the downside, everything you own is only valued at 15% to 8% of its value, which means Philo will only be valued at between $11 and $21.)

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Lew Worthington | Forum Activity | Replied: Sat, Sep 10 2016 1:53 PM

Fredc:

The best way to determine what you dynamic price will be is to select a base package (or compare packages of interest) on the logos web site. Your dynamic price will be calculated automatically. 

Thanks for the reply. But I understand how much I paid. But I don't know how much I WILL pay once I actually own the Philo collection. But I think I have the info I need.

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Lew Worthington | Forum Activity | Replied: Sat, Sep 10 2016 1:58 PM

Mark Barnes:

(The logic on Philo is that base packages are priced at a discount of around 85% to 92% on the cost of buying everything separately. So everything you buy, you're only paying 15% to 8% of it's real value. On the downside, everything you own is only valued at 15% to 8% of its value, which means Philo will only be valued at between $11 and $21.)

That's what I thought. I knew it was some kind of proration, but since I don't know how much reduction is generally applied in base packages, I cannot accurately calculate the amount the Philo collection contributes to the value (reduced as it is) of the base package. What you say places it intuitively where I thought it might be, but it's still largely incalculable with any level of precision. But it doesn't have to be! I'll go with your judgment on this. Smile

Thank you, Mark, and Fredc for your help!

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Plip | Forum Activity | Replied: Sat, Sep 10 2016 7:24 PM

Lew Worthington:

where I thought it might be, but it's still largely incalculable with any level of precision. 

Actually, I think you can get pretty close (I learned to do this from something Mark once posted).

I'll use the L7 Standard Silver base package, which was the first one I saw that included Philo, as an example.

First, I added up the list price of all of the resources that would be new to me, and it came to $3,383.08.

Next, I calculated the discount I was getting. My dynamic pricing for Standard Silver is $356.32. So I'd be getting a discount of 89.47% off the list price for all of the new-to-me resources.

Then, I calculated how much of my dynamic pricing price was represented by the Works of Philo. Philo is actually listed at $189.95 in the base packages (I think the difference is that the $139.99 you cited is still a pre-pub price). $185.95 discounted by 89.47% is $20.01. So If I purchased Philo separate of the base package, I would expect my dynamic pricing to drop by $20.01 (which would make it $336.31).

I don't know if the "slight tweaks" Mark mentioned change that just a bit, but in practice (within the past couple of weeks) I've found this method to be pretty accurate.

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Lew Worthington | Forum Activity | Replied: Sat, Sep 10 2016 8:11 PM

I must say, Philip, that's a bunch of work. Thanks for the detail!

This confirms Mark's two notions:

1) Dynamic advantage of owning is between $11 and $21), and

2) It's better to cancel if I'm going to buy a base package.

Now, my task is to round up spousal agreement that I cannot live without a new L7 Platinum base package. "C'mon, Dear," I'll say. "I'm saving $7 (~1%) by canceling Philo first." Smile

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Mark Barnes | Forum Activity | Replied: Sat, Sep 10 2016 11:39 PM

Lew Worthington:
This confirms Mark's two notions:

My notions were based on a value of $139.99. I'm afraid I took your word on that, and didn't look it up! It's actually listed at $249.99 on the product page, which changes everything. Or perhaps its $189.99 as Philip says. I didn't have time to check.

At $249.99, it would be counted as somewhere between approximately $20 (Bronze) and $37.50 (Collectors). The average amount would probably be about $30. There's more on the percentages here.

This assumes not getting academic pricing. You'd have to discount those amounts by your academic discount if that applied.

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Lew Worthington | Forum Activity | Replied: Thu, Sep 15 2016 5:44 PM

On the basis of initial input in this thread, I went ahead and canceled. But then, in light of later input, I had second thoughts. So, to make sure all the bases were covered, I talked with a customer service rep and asked if he could give me the pricing configuration if I had kept the CP bid and he said the credit given through dynamic pricing would be $27, the same amount I would've paid for the CP resources! I don't know if that's a wild coincidence, an error, or just the way the math should work out, but I'll consider the topic closed in my purchasing decision making.

For now.

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DIsciple II | Forum Activity | Replied: Thu, Sep 15 2016 6:25 PM

I'd be very surprised if you got that amount of dynamic pricing credit. It sounds to me like the customer sales rep doesn't understand how dynamic pricing works. 

Lew Worthington:

On the basis of initial input in this thread, I went ahead and canceled. But then, in light of later input, I had second thoughts. So, to make sure all the bases were covered, I talked with a customer service rep and asked if he could give me the pricing configuration if I had kept the CP bid and he said the credit given through dynamic pricing would be $27, the same amount I would've paid for the CP resources! I don't know if that's a wild coincidence, an error, or just the way the math should work out, but I'll consider the topic closed in my purchasing decision making.

For now.

Posts 906
Justin Gatlin | Forum Activity | Replied: Thu, Sep 15 2016 7:20 PM

Do the Pre-Pub price/retail value and the base package price/price if bought separately.  That is your proportion paid. The lower number is the better way to buy.

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