Subject:
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Re: part pricing theory and practice
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Newsgroups:
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lugnet.market.theory
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Date:
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Fri, 30 Mar 2001 23:31:20 GMT
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Viewed:
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540 times
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In lugnet.market.theory, Kevin Salm writes:
> In lugnet.market.theory, Cary Clark writes:
> > I was thinking about buying some white plates from Brickbay, and came up
> > with this comparison
>
> ..{snip,snip}..
>
> > Which brings me to my theory question: What is setting the price on Brickbay?
>
>
> For a seller on Brickbay, mechanisms exist that track all previous sales and
> provide pricing information. When listing a specific part of a particular
> color, data is available that shows how many times that element has been sold
> (not dependent upon quantity, however), what its lowest selling price has been,
> the highest price, and the mean average. Sellers can look at this data and set
> their own price using this information. Here is an example: [1]
>
> White Plate, 2 x 4 (assuming NEW condition) [2]
> Nubmer of Times Sold Lowest $ Average $ Highest $
> 74 .02 .13 .30
>
> Using this example, I believe that most sellers tend to look at the average >and
> highest prices and then would decide on a price of .15 or more.
> The thinking would be that with 74 sales, demand is good for this item, so a
> price near or above average makes good {business} sense. Buyers seem to be
> paying that price, so why not go for the most one can get?
This tells you nothing about current demand vs supply.
All it tells you is that once there was sufficient demand to sell at those
prices. Without knowing the specifics of the supply and the demand at the
point of the sale, you're "spitting in the wind" in terms of saying what
those numbers mean.
> Since Brickbay has an excellent search feature, a search for a particular
> element can be done to see what the current supply is. By checking to see how
> many sellers have it for sale and their asking prices, actual demand can be
> somewhat crudely determined. What I mean is that if numerous people have the
> part and they all have high asking prices, is this why so much is available?
>
> Look at this search result -->
> http://www.brickbay.com/search.asp?t=72&c=5&i=3788&p=y
>
> 11 people have this item for sale at a price hovering around .15 with one
> seller asking 50 cents. 15 cents is the Brickbay average with 25 cents as the
> maximum, it has been sold 33 times.
>
> The 2x4 Red mudguard is a part that I figure is in everybody's collection and
> most of us have more than we can use. If I were to list this piece for sale
> today with intent of selling it fast, I would price it around .05 and hope >they
> sell. I consider it a piece that does not sell at any price (there are other
> pieces that would have made even better examples).
Why price your part way below what current offerings are. If someone really
only wants that part, they'll go for the lowest price. But rarely will
someone be influenced to buy on a whim simply because you priced extremely
low. If someone's looking for a part, and your's is the lowest, then they
buy from you. Pricing at $.05 is giving away $0.09. Perhaps you want to do
that?
> ^^^^^^^^^^
> I fear that the pricing pattern seems to be just the opposite of my own. It
> appears to me that the majority of people listing parts today look at the >sales
> history data and go for the average price or higher. This trend will push the
> averages higher as more and more of these items eventually get sold. A vicious
> cycle.?
Not that I agree with your assumption, however, capital markets in a world
of information asymmetries, demands that supply balance demand. If parts
don't sell at a given price, sellers will lower the price if they want to
sell. If parts sell out, and none are available elsewhere, prices should
rise to match demand. Actually BRICKBAY's price guide helps you with neither
of those problems.
> ^^^^^^^^^^
>
> Note: I also wonder where many of the maximum prices originated but theorize
> that those prices were realized in the very first days of Brickbay when supply
> was limited and the rush to buy caused buyers to pay {too} much.
Maximum prices has a lot to do (as I mentioned above) with demand and supply
at a particular point in time. I may buy out all available of a particular
part no matter the price if I really need it. That doesn't invalidate the
price as being too high, it simply says that my demend was high.
Then too there are shipping considerations. Many international sellers
underprice US sellers to make the sales playing field level. In theory US
sellers can raise prices if their only competition is international.
-Jon
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Message is in Reply To:
 | | Re: part pricing theory and practice
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| (...) ..{snip,snip}.. (...) For a seller on Brickbay, mechanisms exist that track all previous sales and provide pricing information. When listing a specific part of a particular color, data is available that shows how many times that element has (...) (24 years ago, 30-Mar-01, to lugnet.market.theory)
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