Maximizing Profit for Products with Finite Supply
Hey Roy, a large percentage of our revenue comes from closeout product that is in limited supply and often we find that certain closeout product will typically sell through without much support needed from paid search. What’s the best way to manage bids for finite product like this that we make the most profit but still hit sell through? Oh, we also need to account for seasonal sales curve too.
Assuming you can produce a seasonal sales curve, then you can take your current velocity, and estimate when you'll hit zero. If that date is sooner than your target date, then you need to make one or both of two possible changes:
- Increase prices, maximizing profit and prolonging inventory, or
- Decrease marketing, doing the same thing
Of these two, price is by far the larger lever, as environments like Google Shopping are naturally price-shopping, so Conversion Rate depends more on price than almost anything.
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