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Pick the winner based on earnings (including shipping costs in the calculations)

This deals with the accuracy and general usefulness of the data that PriceLab returns:

1. Shipping costs are a critical part of a webshop selling physical products and so should be an important part of the calculations.

2. When price testing products it makes the most sense to pick the price based on the earnings, and not so much revenue or number of orders.

Let me explain why. Let’s assume a product costs 2$ to buy wholesale
>
> A. Sell 5 products at 10$ Revenue = 5*$10 = $50 - Earnings 5*$8=$40
> B. Sell 11 products at 5$ Revenue = 11*$5 = $55 - Earnings 11*$3=$33
>
> In this case autoselecting the winner based on either revenue or number of orders, would result in losing out on $7 in this example because B would win despite A being the best choice.
>
> Also shipping costs is another major part of the equation. When shipping is 1$ then the difference becomes even bigger:
> A. Sell 5 products at 10$ Revenue = 5*($8-$1) = $35
> A. Sell 11 products at 5$ Revenue = 11*($3-$1) = $22
>
> A $13 difference.

In both cases selecting based on revenue or number of order would be useless (and manually selecting the winner for 1000s of SKU would not be very in-efficient).

NOTE: I’m not talking about multivariate testing in any of the cases

1. About shipping I’m just referring to including the products shipping price in the calculations when testing. So it’s still just A/B testing the price of the same product. You could make just one toggle like “Include shipping price in calculations” when setting up the test, and then if selected use that to include the shipping price in calculations. It wouldn’t have to be more complex.

2. Autoselection doesn’t seem to be able to autoselect a winner based on earnings. Not considering earnings makes this feature not that useable for a webshop, because isn’t optimizing the earnings the point of price testing? Autoselection based on number of orders or revenue amount doesn’t accomplish that goal. Of course autoselecting the winner based on earnings requires the wholesale price and shipping costs.

To fix that implementing an extra field for “Wholesale price amount”, when setting up the test in PriceLab, would be all the input needed for the user. Including the shipping would be handled from the checkbox above. PriceLab could then use that info to calculate the earnings, and make it possible to autoselect the winner based on earnings.

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    Anders Baden Nielsen shared this idea  ·   ·  Admin →

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