www.RAB.com
Sales Management:
Inventory Control, Pricing, and Yield Management
The Price is RightThe Price is Right
• Strategic pricing• Rate cards• LUR• Controlling inventory using math• RevPad• Traffic resources
What We’ll Cover
ConsiderationsGrow revenue
• Packages• Promotions• Digital• Alternative Revenue
Pricing• More options• Better inventory control
Strategic pricing starts with math
Considerations
1. Serve least profitable clients2. No internal procedures3. Insufficient resources4. Not forecasting competitor
reaction5. Incentivize only on revenue6. Hold prices too long7. No segmentation of clients8. Same profit margin9. Base on marketplace10. Base on costs
Pricing Mistakes
Fixed / published
Flexible Grid cardSpreadsheetSoftware
Share Builders
Rate Cards
• Annual• Pre-emptible• Number of commercials• Slow pay• Format targeted• Trade
Rate Classes
Establish Lowest Rate
Flat Rate Card
• Sample Flex Rate Pricing For a Cluster• Sample Rate Terms and Conditions
Flat Rate Card
Ability of sales staff Economic conditions Advertiser demand Ratings, including market rank,
station demos, cume, time-spent-listening
Qualitative composition of audience such as above average income, education and occupational status
Rates of radio competitors Pricing of other media
competitors Daypart, day of the week, week
of the month, month of the year Pricing history at the station
Length of advertiser contract Length of commercials Pre-emptible schedules Advertiser threats Customer anger Pressure from a salesperson Gut feel Dart board Ouija board Price buyers
Y/N
Exercise: Pricing Factors
Publish rates?
The Question
12 x 24 x 7 = 2016 2016 x 52 = 104, 802 + $1 ? + $10?
Importance of Pricing
• Supply & demand• CPP• CPM• Attitude and belief
• Clients• Salespeople
Valuing Commercials
Example:
K100 cuts rate by 10%
Must find 3 new clients to break even
K100 increases rate 10%
Can lose 2 clients to break even
Do the math for your station!
What’s Your Average Order?
1. Attitude2. Belief3. Math
Fear of Rate Increase
Example: “3rd Shift Prime”
Reposition
• Free?• No value?• Something of value instead• Here’s the rate
“Free Spots!”
Bring In the Math
Average Per Advs.
Average Unit Rate
5,000 units
Sell 4,000 x $100 = $400,000
Average is $100
$400,000 ÷ 5,000 = $80
Bring In the Math
• Handshake
• Written pricing policies
• Terms and conditions
The following contract represents an opportunity for [Client Name] to purchase [number] commercials on [Station] at uniform rates. In exchange for the deeply discounted rates on these commercials, the advertiser agrees to the following terms and conditions:
1 Commercial schedules must be placed a minimum of 28 days before flight dates. Schedules placed less than 28 days in advance will be subject to the station’s current pricing at the time the order is placed.
2 Schedules may be moved once within each quarter with a 21 day notice. After that each commercial moved shall be subject to a 5% surcharge. Schedules may not be moved with less than a 21 day notice.
3 All contracted commercials must be used within the allotted period. All unused commercials will be billed to the client at the station’s applicable Monday through Sunday, 24 hour rate.
4 Client agrees to pay all invoices within 30 days. Failure to do so will result in the loss of rate privileges.
5 This is a confidential rate agreement. Breach of confidentiality will result in the loss of rate privileges.
Station Policies
• Broad day parts• Prime only
1. 2. 3. 4. 5. 6. 7. 8. 9.
Clearance Priorities
• RevPad• Sellers’ rates
Evaluate
Include Traffic and Sales Managers
Pricing Meeting
The Simple Truths of Service
www.RAB.com
Sales Management:
Inventory Control, Pricing, and Yield Management