October 26, 2022

Start Thinking

We've talked about this before, but we're gonna talk about it more in the future.

Let's say you have an item that you sell for $49.99. The cost of goods sold on the item is $19.99. Somebody in your marketing department decides that Thursday is "EVERYTHING IS 30% OFF DAY".

Woo.

Hoo.

So the $49.99 item becomes a $34.99 item.

And instead of generating $30.00 of gross margin, you generate $15.00 of gross margin.

In the customer databases I analyze, I calculate the average price that an item sells at over time. In our example above, most days that item sells for $49.99, but on Thursday it sells for $34.99. Maybe the average price that the item sells at ends up being $47.85.

Now, if the item sells for $49.99, I code the item as selling "at/above" the historical average price point.

If the item sells for $34.99, I code the item as selling "below" the historical average price point.

Turns out there are all sorts of interesting things you can learn when you create this attribute and store it in your customer database.

So start thinking about creating this attribute in your database, ok? We'll talk more about it in the upcoming days.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.

Price is Not the Entire Story Here

We studied one category yesterday. Here is the relationship between change in price and change in total margin dollars, by category. Tell me...