3 ms·

1% of revenue for any company earning in excess of $10k per month seems excessive. But I guess if those clients are also seeing substantial percentage increases

by hahla 14y ago

1% of revenue for any company earning in excess of $10k per month seems excessive. But I guess if those clients are also seeing substantial percentage increases in revenue it would warrant the 'data fee'. This is classic supply and demand on-the-go pricing, but from my initial glance the site doesn't really explain where they have tested it, and what real results were measured.

saurik 14y ago
It is actually 1% of revenue for all companies: the lower-priced brackets have caps that make it work out as 1% (or higher, due to the granularity) across all brackets. My problem with this is that there is no way that this algorithm is really that impressive to warrant what might be a substantial amount of someone's margin: if you are finding yourself spending a ton of money on this algorithm, you can easily re-implement it... based on both the video and the FAQ it sounds like they are doing simple hill-climbing, which should take a few hours to implement (and which, I will however point out, isn't even anywhere near optimal for this kind of problem).
- ljd 14y ago
  It's not hill climbing. Gradient descent has some severe limitations. Also, I have mentioned it before but if you are charged 1% and someone makes you 2%, I don't understand why you wouldn't buy from them. (On a side note: we earn our sellers more than 2% on average)
  - saurik 14y ago
    Rereading what I said, I am not certain of the confusion, but I will expand: you can't evalulate the price of your product using the gross value it provides in isolation, you have to evalulate the price of your product using the net value it provides in comparison to competitors. If I ended up in the situation where I was paying you hundreds, certainly if I was paying you thousands, of dollars a month, I find it impossibly difficult to believe that I couldn't get more "bang for the buck" by spending the time to reimplement the features I am getting from you. (As an entirely unrelated argument, the optimal margin might not even be 1%: to charge a percentage of revenue for something that doesn't have any scaling terms in proportion to the dollars being moved is, to put it lightly, "bold"; my business, for example, probably couldn't afford 1%, yet I routinely move tens of millions of dollars... and I certainly, at the price of hundreds of thousands of dollars a year, would have no trouble reimplementing your setup, and in fact have done similar things as side projects on various occasions.)
    - ljd 14y ago
      Customers that do tens of millions of dollars a year tend to call us and get a lower price from us. They don't use the signup box. It's common for enterprise companies to self select by calling for special pricing and in most cases we oblige. We want to make a fair deal for all parties. On the other hand, I get it - You would never use us, you would try to build it yourself. I can respect that. I get like that for a lot of stuff I see. The founding team's past experience is in algorithmic asset valuation, commodity trading and machine learning. We are life long learners and are dedicating our time to find better ways of helping ecommerce stores pick better prices. We have several years of experience in workflow automation and we apply that to our current business to make our product as cheap as humanly possible and pass those prices along. Our closest neighbor in the pricing game charges hundreds of thousands of dollars in fees because they use so much human labor to do things. Saurik, if you ever want to do one less thing and want us to do your price testing. Please give us call, I would love to find a price that makes it worth your time. After all, I am fond of dynamic pricing. :)
      - saurik 14y ago
        You seem to have missed the point of me providing that number (something I take some of the blame for, as I was explicitly mixing two arguments; I did go out of my way to attempt to differentiate them, however): I was demonstrating that even at an incredibly large extreme with regards to absolute revenue, the percentage margin doesn't really become affected; when I was moving tens of thousands (as opposed to millions) of dollars, the answer would have been the same: you can double my revenue, but at 1% you are talking about most of the magin that I'm currently playing with for my not-entirely-uncommon business model (where my upstream obligations, fees, and taxes, scale nearly linearly within my plausible target price range, with respect to the ticket price of the item being sold). It isn't because I would be an "enterprise company" that I would need special pricing, it is because your pricing model makes a fundamental assumption about the kind of business model that the other person might be engaged in: if you had a "percentage of profit" model--even though you would still be in the "this is too expensive: I could hire a full time developer and a CS grad student at less than this price to get 90% of the benefit" regime--you would no longer de-facto price yourself out of various markets. (FWIW, my experience on this is that I was a CS person with an algorithms fetish who was recently working with a long-time machine-learning specialist in a weirdly-related-but-not-even-remotely-competing area to your company. The result was lots of conversations both internally and with various of our clients with regards to how to price such a service: the result is that I have seen both a lot of failure modes of advertising and of asking for "percentage of revenue". This is, of course, in addition to running most of my current business on a "percentage of revenue" basis, and seeing the kinds of problems and misunderstandings it can cause.)
ljd 14y ago
We are making all of our vendors more than 1% and for some we've doubled their revenue using a Limited Supply strategy. They weren't a large store but we did make them several thousand more per month.

by hahla 14y ago

saurik 14y ago

It is actually 1% of revenue for all companies: the lower-priced brackets have caps that make it work out as 1% (or higher, due to the granularity) across all brackets. My problem with this is that there is no way that this algorithm is really that impressive to warrant what might be a substantial amount of someone's margin: if you are finding yourself spending a ton of money on this algorithm, you can easily re-implement it... based on both the video and the FAQ it sounds like they are doing simple hill-climbing, which should take a few hours to implement (and which, I will however point out, isn't even anywhere near optimal for this kind of problem).

ljd 14y ago
It's not hill climbing. Gradient descent has some severe limitations. Also, I have mentioned it before but if you are charged 1% and someone makes you 2%, I don't understand why you wouldn't buy from them. (On a side note: we earn our sellers more than 2% on average)
- saurik 14y ago
  Rereading what I said, I am not certain of the confusion, but I will expand: you can't evalulate the price of your product using the gross value it provides in isolation, you have to evalulate the price of your product using the net value it provides in comparison to competitors. If I ended up in the situation where I was paying you hundreds, certainly if I was paying you thousands, of dollars a month, I find it impossibly difficult to believe that I couldn't get more "bang for the buck" by spending the time to reimplement the features I am getting from you. (As an entirely unrelated argument, the optimal margin might not even be 1%: to charge a percentage of revenue for something that doesn't have any scaling terms in proportion to the dollars being moved is, to put it lightly, "bold"; my business, for example, probably couldn't afford 1%, yet I routinely move tens of millions of dollars... and I certainly, at the price of hundreds of thousands of dollars a year, would have no trouble reimplementing your setup, and in fact have done similar things as side projects on various occasions.)
  - ljd 14y ago
    Customers that do tens of millions of dollars a year tend to call us and get a lower price from us. They don't use the signup box. It's common for enterprise companies to self select by calling for special pricing and in most cases we oblige. We want to make a fair deal for all parties. On the other hand, I get it - You would never use us, you would try to build it yourself. I can respect that. I get like that for a lot of stuff I see. The founding team's past experience is in algorithmic asset valuation, commodity trading and machine learning. We are life long learners and are dedicating our time to find better ways of helping ecommerce stores pick better prices. We have several years of experience in workflow automation and we apply that to our current business to make our product as cheap as humanly possible and pass those prices along. Our closest neighbor in the pricing game charges hundreds of thousands of dollars in fees because they use so much human labor to do things. Saurik, if you ever want to do one less thing and want us to do your price testing. Please give us call, I would love to find a price that makes it worth your time. After all, I am fond of dynamic pricing. :)
    - saurik 14y ago
      You seem to have missed the point of me providing that number (something I take some of the blame for, as I was explicitly mixing two arguments; I did go out of my way to attempt to differentiate them, however): I was demonstrating that even at an incredibly large extreme with regards to absolute revenue, the percentage margin doesn't really become affected; when I was moving tens of thousands (as opposed to millions) of dollars, the answer would have been the same: you can double my revenue, but at 1% you are talking about most of the magin that I'm currently playing with for my not-entirely-uncommon business model (where my upstream obligations, fees, and taxes, scale nearly linearly within my plausible target price range, with respect to the ticket price of the item being sold). It isn't because I would be an "enterprise company" that I would need special pricing, it is because your pricing model makes a fundamental assumption about the kind of business model that the other person might be engaged in: if you had a "percentage of profit" model--even though you would still be in the "this is too expensive: I could hire a full time developer and a CS grad student at less than this price to get 90% of the benefit" regime--you would no longer de-facto price yourself out of various markets. (FWIW, my experience on this is that I was a CS person with an algorithms fetish who was recently working with a long-time machine-learning specialist in a weirdly-related-but-not-even-remotely-competing area to your company. The result was lots of conversations both internally and with various of our clients with regards to how to price such a service: the result is that I have seen both a lot of failure modes of advertising and of asking for "percentage of revenue". This is, of course, in addition to running most of my current business on a "percentage of revenue" basis, and seeing the kinds of problems and misunderstandings it can cause.)

ljd 14y ago

We are making all of our vendors more than 1% and for some we've doubled their revenue using a Limited Supply strategy. They weren't a large store but we did make them several thousand more per month.