RAB

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