Why are we paying more for dynamic pricing? How is it calculated?

I'd like to thank the forums for the passionate engagement this conversation has generated.  It illustrates just how valuable our Dynamic Pricing program is to each of you, and reinforces for us how important emphasis on doing the right thing for our customers is.

The Dynamic Pricing program is complex from a development standpoint, it requires ongoing manual oversight, and it is expensive to maintain.  If we didn't feel it delivered significant value to our customers and our business, we would not maintain an ongoing investment in the program.  

I'll do my best at putting in words how I'd explain the program to someone not comfortable or familiar with it.

As consumers, we typically purchase collections because of the value achieved by purchasing in bulk.  With Dynamic Pricing, it doesn't matter if you need to purchase 1 remaining resource or 90% of a collection; it's a better deal to complete the collection than to purchase the remaining resources individually, and you never pay for the same resources twice.

Example:

• Assume a collection is made up of 10 resources worth $13 each.
• The collection is priced at $100.
• Buying all 10 resources individually would cost $130.

Consider what would happen if you owned 2 of the resources, and were interested in buying the remaining 8.

If you were shopping Amazon for this "bundle" of books, there would be two choices:

1. Buy the 8 remaining books individually @ $13 each for $104.
2. Purchase the bundle, and get all 10 books for $100. 

To get the best price, you must purchase the bundle, and with it 2 books you already own a second time. Dynamic Pricing solves this problem.

The price per book of the 8 books you actually care about is $12.50 when paying $100 for the bundle.  In this instance, still better then purchasing the books individually.   However this doesn't remain true if you happen to own more of the books in the bundle.

If you owned 3 of the books already, paying the full individual price of $13 for each of the remaining 7 would cost $91, cheaper than purchasing the $100 collection.  Dynamic Pricing solves this problem.

Here's what happens with the Logos purchase in the same scenario using our current Dynamic Pricing model, where you still have two choices:

1. Buy the 8 remaining resources individually @ $13 each for $104.
2. Complete your collection, and get only the 8 remaining resources for $80.37. (~$10.05 each)

During this transaction, you are only licensed the 8 remaining resources. You are not purchasing something you already own, nor are you paying for something you already own.

By completing the collection, you are paying only ~$10.05 per resource for the 8 remaining resources.  That's a savings of $2.95 per resource from their regular price.  It's also a $19.63 savings vs purchasing the entire 10 resource collection for $100. 

With Dynamic Pricing, you're getting the benefit of purchasing in bulk, (a reduced cost per item), even though you're not purchasing the bulk you don't need. 

We think the program is a very fair execution of our objective to not charge users twice for the same resources, and hope you do as well.

I'm not posting an in depth explanation of the math.  It does rely on data not exposed on our website.  To be clear, the old formula relied on some of that same data.  The explanation you share from Mark Barnes includes a reasonable proxy for some of that data, and generated correct or close approximations of the old Dynamic Price most of the time.  The same explanation will still get everyone very close to the new Dynamic Price; the range being, off by a few percentage points to perfect, depending on the specific situation.  In the example I gave above, Mark's explanation is off by less than 1/2 of 1%. (37 cents off on $80.00) 

I'll close with an interesting side note:  Apple has recently rolled out a similar program they call "Complete My Album", one of the closest parallels to our program I can find.  They've introduced a program that their customers and their business should both benefit from.  But Dynamic Pricing offers a better value.[:)]

From Apple:  

If you buy a song, TV episode, or app and later decide that you want the full album, season, or app bundle, you can get the rest of the songs, episodes, or apps without paying the full price.

Items that don't apply toward completing your album include:

• A song from a complete works album (for example, Beethoven: The Complete Symphonies). 
• A song that was part of a Single of the Week or Discovery Download promotion.

If you don't see an album in Complete My Album, but it meets the above criteria, you might own enough songs from the album that the Complete My Album price would be more than the price of a single song. 

With Dynamic Pricing it doesn't matter what collection the resource you own initially came from, nor does it matter if you got it for free, you don't pay for the same resource twice.

With Dynamic Pricing, it's always a better deal to complete your collection than it is to purchase the remaining resources at their individual regular prices.