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Sales Management:. Inventory Control, Pricing, and Yield Management. www.RAB.com. The Price is Right. The Price is Right. What We’ll Cover. Strategic pricing Rate cards LUR Controlling inventory using math RevPad Traffic resources. Considerations. Considerations. Grow revenue

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  1. Sales Management: Inventory Control, Pricing, and Yield Management www.RAB.com

  2. The Price is Right The Price is Right

  3. What We’ll Cover • Strategic pricing • Rate cards • LUR • Controlling inventory using math • RevPad • Traffic resources

  4. Considerations Considerations Grow revenue • Packages • Promotions • Digital • Alternative Revenue Pricing • More options • Better inventory control Strategic pricing starts with math

  5. Pricing Mistakes • Serve least profitable clients • No internal procedures • Insufficient resources • Not forecasting competitor reaction • Incentivize only on revenue • Hold prices too long • No segmentation of clients • Same profit margin • Base on marketplace • Base on costs

  6. Rate Cards • Fixed / published • Flexible • Grid card • Spreadsheet • Software Share Builders

  7. Rate Classes • Annual • Pre-emptible • Number of commercials • Slow pay • Format targeted • Trade

  8. Establish Lowest Rate

  9. Flat Rate Card Flat Rate Card • Sample Flex Rate Pricing For a Cluster • Sample Rate Terms and Conditions

  10. Exercise: Pricing Factors Y/N • 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

  11. The Question Publish rates?

  12. Importance of Pricing 12 x 24 x 7 = 2016 2016 x 52 = 104, 802 + $1 ? + $10?

  13. Valuing Commercials • Supply & demand • CPP • CPM • Attitude and belief • Clients • Salespeople

  14. What’s Your Average Order? 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!

  15. Fear of Rate Increase • Attitude • Belief • Math

  16. Reposition Example: “3rd Shift Prime”

  17. “Free Spots!” • Free? • No value? • Something of value instead • Here’s the rate

  18. Bring In the Math

  19. 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

  20. Station Policies • 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: • 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. • 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. • 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. • Client agrees to pay all invoices within 30 days. Failure to do so will result in the loss of rate privileges. • This is a confidential rate agreement. Breach of confidentiality will result in the loss of rate privileges.

  21. Clearance Priorities • Broad day parts • Prime only

  22. Evaluate • RevPad • Sellers’ rates

  23. Pricing Meeting Include Traffic and Sales Managers

  24. The Simple Truths of Service

  25. Sales Management: Inventory Control, Pricing, and Yield Management www.RAB.com

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