Applied Mathematician Needed to Help Outline the Best Tiered Pricing Structure for an New Service




Liam Williams United States


OpenSep 10, 2019

I have 2 needs in this project. This is really 2 projects in 1, but I would like to work with the same developer on both of them.

I am developing a new service offering for my company and need a mathematician to review the numbers to help us figure out several things.

My company is in the liquidation industry. We purchase consumer returned products flip them onto eBay and our website for resale. Recently we opened a new wholesale division of our company and need to structure how we will sell to our wholesale clients.

My company is a little unique which offers us some strategic advantages to offer a service that is currently not offered in the industry, not even by the big boys. Since we started, we realized that the only way for us to be successful in this industry with all of the details was for us to develop our own proprietary software to help us with the analytics to know how to price our products, among other things. This software has been able to provide us much more predictability than what anyone else has. We can predict what our buyers will profit (so we can be sure that they win and come back), as well as, we know what it is reasonable to sell the item for. Currently no one in the liquidation industry offers any type of returns for broken products. It is expected and understood that there will be broken projects in shipments (roughly 20-22% of the items). This makes it very tough for the starting out or smaller time eBay seller. We have a solution that we can offer.

Here is the idea... (1) We have a wholesale client that says they want to buy a 'pick list' from a truck (2) The buyer dictates what MSRP they are willing to buy 'down to' (ex. everything down to $50 MSRP, $40 MSRP, $30 MSRP) (3)We run the truck manifest through our proprietary software so that it can decide what item will be profitable for the client to buy and sell. It also filters out all the types of products not wanted (4) The buyers receives the manifest and approves what he will be buying (5) We sell the product on a tiered % of MSRP pricing schedule (ex. $79.99 and above MSRP will be sold at 40% of MSRP). (6) The buyer receives the product and has 90 days to make 1 return to us. Dependent upon what MSRP dollar they bought down to will decide what % of the purchase price is the cap on how much they can return (ex. $50 MSRP- 10% of purchase price, $40 MSRP- 15% purchase price). (7) We sell the remaining items from the truck by the pallet as consumer returns liquidation.

Things to Consider
1) How should we structure our tiers so that we make the most money
2) What percentage should we charge at each tier so that we make money but our end client is positioned to make money also
3) What would you recommend that we allow our return %s to be so that we do not open ourselves up to too a possibility of losing.
4) We need to make money on the full truck, including liquidation sales

I can provide as much data as necessary for you to answer any questions or to make accurate assumptions. I have plenty of sample truckload manifests that I can also send for you to use as examples.

Our main business that I breezed over above was that we sell our items direct to the consumer through eBay and our website. We compete on price, period. Our game is to drive sales velocity and we have designed a very aggressive sales matrix to make sure that we do not have product sit on our shelves too long. Based upon our average turn time and our gross margin, after a certain point, it is better for us to sell an old item at a loss in order to get our money out of it so that we can reinvest those monies in a performing item.

We have created our sales structure matrix, but I am sure that there are some things that we have not thought about, as well as, I am not sure that the rate with which we are discounting makes sense from a mathematics point of view. We have really designed our discounting matrix by our gut. We would really like someone to spend some time on this and help us make sure that this is set up as best as possible for us to win.

We currently have 2 discounting matrixs. One is for products that are over $150 MSRP and the other is for products under $150 MSRP. This helps ensure that we do not drop a more expensive item by $400 overnight. So that you can understand how the matrixs are structured, the X axis is the sales group that the item is in (sales group 40 means that we can discount the item up to 40% from its set list price before we hit our breakeven point). The Y axis is the number of days that the item has been listed for sale. We run 3 sales per week on every item (Tues-Wed, Thurs-Fri, & Sat-Mon). That is why the days are not exactly evenly counting as they increase.

We can provide any financial numbers that would be applicable for you to perform this task as well as the current matrixs.

Skills & Expertise Required

AI Applied Behavior Analysis (ABA) Big Data Deep Learning Machine Learning 

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