I often buy book from logos.com and amazon.com, but since I discovered the logos.com Community Bidding Price, I’m so addicted to play and buy through this engaging method, that I think we implement it in some niches, like Seminar and Teaching.
The community bid pricing works smooth and with fun:
The seller plans to build a product, and estimates a production cost of, let’s say 1.000$. He describe the future product, and let the community to decide to pre-pay it.
Like the Kickstarter model, the product is built only if a market exist and if the demand pays for it.
The bidding price is quite different and here is the tricky part: each one of the potential customer bid to the highest price he would like to pay.
i.e. if 10 people bid 80$, the production cost is already at 80% of the total (800$). They will pay any price under 80$. Then other 10 people bid 50$.
So we have a peak at 80$ with 10 people ready to pay a 800$ total, and a peak at 50$ with 20 people ready to pay a total of 1.000$! Production cost covered, all 20 will get the product for the 50$ price.
Two days later the bidding closes and they all pay 50$. And the price moves to pre-sales prices at i.e. 150$, still discounted from the final market price of 200$.
You see now the catch?
How a little difference with Kickstarter makes it 10x awesome?
- A day after the bid close, you feel like “Wow, I got this for a 66% discount, what a deal!”
- You plan what you afford/feel right, but you will pay probably much less. Often
- All people pay the same price, and get the same product. No cheat, no trick, no jealousy
- The producer get is money and start building it
Now let’s focus on a different niche, the Seminar and Teaching field.
I want to teach a three days class about guerrilla marketing. To prepare the course I need maybe a 2 days of study, powerpoint, notes and thinking, which costs me my normal fee of 100$ a day.
I call the theatre in Rome which can hold conference for 30-100 people, for 500$ a day.
So 100$ x 3 + 500$ x 3 makes 1.800$ total.
I just write the description of A 3 days Guerrilla Marketing class for Middle-Management who wants to move to Top-Management. And the production cost of 1.800$. Deadline for the bidding 2 months from now. Max 30 people audience. Production completion after bid is 3 weeks. Final ticket is 300$. Done in 15 minutes.
I sit at my desk and forget it.
2 months later I receive a email saying “Your seminar bidding close tomorrow. The final price at the moment is 80$ for 25 people who signed. Production cost covered at 111% (2.000$)“.
I study few days, powerpoint, word, whatever…while the website market the seminar for 300$ a person, with 90% discount for a week, and reedemable coupon to all pre-production buyers with a 50% discount to give to a friend.
Do you like?
To setup the website and business I need about 3.000$. Any bid?
If you want to check my calculation, the trick is to sum all people who want to pay a price with the price point.
i.e. at 40$ point there are 34 people bidding, plus 5 people bidding at 80$ and a person bidding at 150$ max. So it’s a 40 people who’d pay 40$, a total of 1.600$, for about 90% of 1.800$.
Same at 5$ point, we have a total of 144 people who’d pay and it makes the 40% of production cost. Nice!