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

Recently we have been discussing changes in dynamic pricing.

https://community.logos.com/forums/p/123409/806378.aspx#806378

I said there:

"There was already quite a complicated formula for calculating dynamic pricing but we had become familiar with it and MVPs like Mark Barnes often explained it on these forums. It was a fair application of Faithlife's policy not to charge us for the same resources twice.

I haven't attempted to work out the new formula but Glenn Airoldi said it does not only take into consideration the usual selling price of the resources we have already bought but also other factors.... "

My questions are: What are the other factors? and, How does it remain a fair application of the policy not to charge users twice for the same resources?

Mark Barnes previously explained the old way dynamic pricing was calculated with a simple example which i have edited lightly:

"This illustration might help.

Imagine a product that bundles ten resources and sells for $250.
Six 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.

You might have picked one up on a freebie, bought another a full price, and got one more as part of a base package, and a fourth as part of a 20 volume community pricing deal." The point is it doesn't matter what you paid for them - what matters is their value in relation to the total bundle value.

It took new users like me a little time to get used to this idea as, without an explanation like this, it seems unfair. In Mark's example, if you paid full price for the resources ($180) you would end up paying $117.65 for the remainder, not $70.

But I did get used to that idea and ca\me to understand that it was fair. Now Faithlife is saying that the new way of calculating dynamic pricing, 'takes more than just the percentage into account'

(see here: https://community.logos.com/forums/t/122737.aspx Glenn's post, point 10).

(By the way I looked for the 'other factors' phrase from Glenn to link to but I can't find it now.)

If it 'takes more than just the percentage into account' surely that means we are, at least in part, paying for the same resources twice since we already own a fixed percentage of the value of the collection!

Can someone from Faithlife help me understand this? This new policy has resulted in lots of angst over previously agreed pre-pub. prices (though that has now been allayed). It has also increased the price for any kind of collection or base package upgrade.

So, What are the other factors? and, How does it remain a fair application of the policy not to charge users twice for the same resources?

Thanks,

Colin

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Comments

Justin Gatlin

Bump. I think we are entitled to some transparency in dynamic pricing, since the old version seems to be the plain, logical way of calculating it.

Glenn Airoldi (Faithlife)

https://community.logos.com/discussion/comment/807217#Comment_807217

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:

Buy the 8 remaining books individually @ $13 each for $104.
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:

Buy the 8 remaining resources individually @ $13 each for $104.
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.

Lew Worthington

https://community.logos.com/discussion/comment/807285#Comment_807285

Thank you for the detailed explanation.

SineNomine

https://community.logos.com/discussion/comment/807285#Comment_807285

I'd like to thank the forums for the passionate engagement this conversation has generated.

I'd like to thank you for this post. It was very helpful in understanding the new Dynamic Pricing program.

Colin

https://community.logos.com/discussion/comment/807285#Comment_807285

Thanks very much Glenn for dealing with my questions so graciously and taking the time to post such a detailed response. The ability to engage with staff at Faithlife like you on the forums is surely a large part of the reason why you have such dedicated and passionate customers. Of course the amazing product with so many good resources probably contributes to that too! Thanks again,

Colin

Bruce Dunning

https://community.logos.com/discussion/comment/807285#Comment_807285

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.

Dynamic pricing is very much appreciated. Thank you Faithlife!

Steve Maling

https://community.logos.com/discussion/comment/807397#Comment_807397

Yes, it truly is much appreciated!

Average Joe

https://community.logos.com/discussion/comment/807285#Comment_807285

If Apple is copying you, you must be doing something right. [;)]