Archive for March, 2015

The Secret Pricing Formula

So we wanted to set our pricing so that it:

 

  • Wouldn’t be sensitive to the price of the claim
  • Wouldn’t be sensitive to the size of the market
  • Was based on the minimum calculations possible
  • Wouldn’t be based on collections
  • Would be fair to our retail customers and
  • Would be fair to us.

 

Since co-op claims are a matter of paper handling, the more paper we handled the more we charge – the way we know how much paper we handled is how much the postage costs. If we get a 16-page flyer and bunch of tearsheets and some radio ads, the postage is going to be X. If we just handle a couple of tearsheets, all going to the same manufacturer, the postage is Y.

 

So what we do is we put all your claims together, put them in envelopes, put stamps on them and get a total postage cost.

 

Then – drum roll – we send a bill for 7 times that amount.

 

The price is based on our cost for the postage to mail everything out. Doesn’t matter what market you’re in, doesn’t matter what the claim is worth.

 

That includes the postage, all your reports, all the claims; the complete deal for the month.

 

So a store in Albany with a television ad is paying the same as a guy in Amarillo with a radio schedule.

 

So if you have a big month for claims, we aren’t stuck behind some flat fee and if we have a small month, you aren’t.

 

Brilliant. And it works

 


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