traderone

I'm toying with an idea, but can't do the math...

I want to reduce the price of every domain I own, everyday, by an unknown appropriate percentage, so that at the end of the year (365 days later) the price is $5.
Another words if I price a domain at $1,000, I would need to multiply the $1,000 price by *aprox .985 and in 365 the price will be $5.00.

day 1 $1,000
day 2 $1000 x .985 = $985.
day 3 $985 x .985 = $970.22
etc.
day 365 $5.00

If however the starting price is $20, the percentage will obviously need to be different to end with a price of $5.00 in 365 days. It needs one formula that can be used for $20 or $1,000, or whatever number I choose.
????: NamePros.com http://www.namepros.com/the-break-room/99033-open-source-project-pricing-strategy.html

I don't want the price to fall at the end like this $20, $15, $10, $5.
Thats why a percenatge is the way to go. (The price reduction slows down the lower the price goes.)

It could then be advertised on the site something like this: "If you don't like our prices, come back tommorow!". (Should drive traffic, right?)
I think the pricing strategy would be ideal for domain names, but may have other applications.


365 days in a year
Starting price = Y
ending price = $5
What's the formula?

That's the start.
A person could copy and paste from an Excel spreadsheet directly into the WYSIWYG NVU for starts I think, the results would be a huge table. :-/
Or next step, would be write a script using the formula.

Regards,
John R.

Genialnames

One question,
don't you think that people will try to last as long as possible to buy at the lowest price?

Unless the real value is 5 and yo then surcharge it up to 1000 to give the impression that price are lowering it sound you are going to loose money from a certain point...

dunno

__________________
www.genialnames.com
Mostly developable Domain Names...because the name says it all! Olympionic.com it's mine, it could be your!

traderone

Everyone asks a bit more than they think there domain is worth, say for example I decide a domain name will sell for $700 in a years time. So I price it at $1,000. I advertise it all around message boards, sedo, afternic, (let's not digress into comisions and legal-ese just yet) . But my point is if the site gets the traffic, the market will dictate that the name will not go that low. If however the site is NOT getting the traffic, you need to pull it down. And remember, the lower the price goes, the slower the drop in price.

armstrong

I don't recall the precise math that you require, although I know you need to mess around with logarithms. Why don't you make your life simpler, and instead of multiplying by a precalculated factor everyday, you would subtract by a precalculated amount? The amount to subtract (S) is easily calculated:

S = (startprice - $5) / 364

__________________

Genialnames

mmm, that would also affect the formula, you need to estabilish a top price and then a bottom price, then have the formula that calculate a percent that low the price from top to bottom in 365 days.

Another question , if at the end of the year the item was not sold, you will start with the same cicle again?

__________________
www.genialnames.com
Mostly developable Domain Names...because the name says it all! Olympionic.com it's mine, it could be your!

traderone

1000.00 1st day
985.00
970.23
955.67
941.34
927.22
913.31
899.61
886.11
872.82
859.73
846.83
834.13
821.62
809.30
797.16
785.20
773.42
761.82
750.39
739.14
728.05
717.13
706.37
695.78
685.34
675.06
664.93
654.96
645.14 1 month
etc.
409.96 2 months
etc.
260.51 3 months
etc.
165.54 4 months
etc.
105.20 5 months
etc.
66.85 6 months
????: NamePros.com http://www.namepros.com/showthread.php?t=99033
etc.
42.48 7 months
etc.
26.99 8 months
etc.
17.15 9 months
etc.
10.90 10 months
etc.
6.93 11 months
etc.
4.08 365 days <--- If I was better at math, this would be $5.00


1st Edit:

Originally Posted by armstrong

I don't recall the precise math that you require, although I know you need to mess around with logarithms. Why don't you make your life simpler, and instead of multiplying by a precalculated factor everyday, you would subtract by a precalculated amount? The amount to subtract (S) is easily calculated: ????: NamePros.com http://www.namepros.com/showthread.php?t=99033 S = (startprice - $5) / 364

Thanks armstrong!, I will try that, and I can see by my above example that I'm glad to see the "-$5" portion of your formula can be easily changed for each domain name. (They drop quicker than I thought in the first few months ) Once this is setup, I think it will be easy.

Originally Posted by traderone

I don't want the price to fall at the end like this $20, $15, $10, $5. Thats why a percenatge is the way to go. (The price reduction slows down the lower the price goes.)

2nd Edit, added after a few posts
Here's a better example.
Using Armstrong's handy formula which works great in Excel, I can edit his formula very easily to suit my needs. My hypothetical situation is I think my domain name is worth $1,000 retail, and $400 wholesale. So , I set the formula to look like this:
=POWER(400/1000,1/12)*E12
(E12 is the first cel in Excel with a value of 1,000)
notice how the price drop slows down as it gets closer to wholesale price ($400).

1000
926.48 month 1
858.37 month 2
795.27 month 3
736.80 month 4
682.63 month 5
632.45 month 6
585.969 month 7
542.88 month 8
502.97 month 9
465.99 month 10
431.73 month 11
400 month 12

Originally Posted by Genialnames

mmm, that would also affect the formula, you need to estabilish a top price and then a bottom price, then have the formula that calculate a percent that low the price from top to bottom in 365 days.?

You where right, establishing a top and bottom price is important.

Originally Posted by Genialnames

Another question , if at the end of the year the item was not sold, you will start with the same cicle again?

If after a whole year, (after promoting the name and getting much traffic on my site) the domain is still not sold, then I think it is time for me to reevaluate my 'percieved value' of the domain. Armstrong's formula works great because when I stretch it beyond the 12 months, this is what happens:
400 month 12
370.593949 month 13
343.3496876 month 14
318.1082915 month 15
294.7225199 month 16
273.0559563 month 17
252.9822128 month 18
234.3841932 month 19
217.1534093 month 20
201.1893487 month 21
186.3988881 month 22
172.6957501 month 23
160 month 24


In these examples I chose 12 months to set the curve because I wan't to move and refresh my inventory, I could of however stretched the curve out over 24 months instead of 12 months very easily:
=POWER(400/1000,1/24)*E12

Thanks,
John

armstrong

I remember now. No logarithms required, justthe formula:

b = y^1/x

In excel, the formula to compute for the factor in your example would be:

=POWER(5/1000,1/364)

substitute the correct numbers in that formula, and you should be ok. The reason you ended up with 4.08 is probably because of rounding error.

EDIT: I still think subtraction is the way to go.

__________________

traderone

Woohoo! Thanks

????: NamePros.com http://www.namepros.com/showthread.php?t=99033

The curve can bend just as nice as from $1,000-$500, as it can from $1,000 to $5". The lower it goes, the slower it drops. I like the idea of it slowing down as it gets closer to my perception of fair valuation.

I think what I really like about this is a lot of my domain names I honestly do not know how to value them. With enough traffic, economics 101 says they will not go to cheap. I think it would be human nature to be excited to keep checking back, and possibly create a buzz.

Developing traffic is important for this to work.

traderone

bump
Edited comments in red.