How to Coda Volume Based Pricing?
The more you buy the less you pay per unit
The use case can be any good or service that deals with any irregularity. A simple example is; you buy 6 apples for € 2.05 and you buy 28 apples for € 5.50. It also works when sell or buy materials like sand: 1000 kg for € 176.74 but 10.000 kg for € 1060 and 50.000 kg for € 3990. Likewise consulting, the more hours per month, the lower the average price. All these calculations come down to a filter logic. In the given example we worked with large numbers and we showed that you do not need to have each — in between — number living in your table to be able to get the result you need.
In this blog I show how to get an up to date price for your goods in relation to the consumed or bought goods / services. The example is the pricing of sand.
Before we create a table with sand prices, we should iron a two things out. How is the price setting?
- option one: you pay the price for 10.000 kg even if you do not need it all.
- option two: you pay the price per 1000 kg, thus per lowest unit
Option 1 — fixed volumes
you can only order 1000, 10.000, 50.000 or any fixed volume mentioned. You cannot order anything in between. 20.000 means paying for 50.000 even if you do not need it.
This approach you find often in consulting contracts. You get for example 45 hours for 5000 Euro. In case you only need 38 hours, you still pay 5000 Euro. On top these contracts often stipulate a consumption in for example 3 months or before the end of the year or any other period. You need 50 hours, you need a different contract.
It is like going to a restaurant, no matter how much you eat of your plate, you pay the full price for your plate. You won’t get money back if you leave the vegetables on your plate. You will not get a reduction on your dessert if you did not finish your starter. You pay per ordered product regardless your consumption.
Option 2 — floating volumes
Floating volumes mean you can order any volume as long it is a multitude of the lowest unit, in our case 1000. Assumed we want to buy 5000 kg sand. How much does this cost?
- 1000 kg for € 176.74 and per kilo → €0.176
- 10.000 kg for € 1060 and per kilo → €0.106
- 50.000 kg for € 3990 and per kilo → € 0.079
5000 is more than 1000 and less than 10.000. Should we take the price of the 10.000 and divide by two or the price for the 1000 and multiply it by 5?
Price Until or Price As Of?
We have to make a choice on how to read the pricing logic. How to decide between the two options in our case of 5000 kg?
- 0.176 per kilo
- 0.106 per kilo
You can argue that between 1 kilo and 1000 kg the price is € 0.0176 per kilo, although you can only buy 1000 kg. The next step is 1001–10.000 kg and we could say that since 5000 kg is not yet 10.000 kg and thus not yet to its related price, we go for 5 times the price per 1000 Kg. This is what will happen in most cases.
You can also say that as of 1 kg you pay the price per 1000 kg (while factual you buy 1000 kg) and as of 1001 kg you pay the price for 10.000 kg, while factual you buy 2000 kg).
This is not about right or wrong, it is about a choice you make. The first is read as price until and the second price as of.
We start with the outcome to give you an idea why it matters to discuss this principle before you start coding.
We first look at the Price As Of. We take all the values in the table that are smaller or equal to the volume we want (and if blank we inject “1000”) and of this list we take the last item.
The second one, Price Until works the other way around:
It is up to you to make a choice, but don’t mix them. My doc in my Coda Gallery that explains these principles in more detail:
I hope you enjoyed this article. If you have questions feel free to reach out. Though this article is for free, my work (including advice) won’t be, but there is always room for a chat to see what can be done. Besides you find my (for free) contributions to the Coda Community and on Twitter
My name is Christiaan and I support SMB with calculations (budgets and planning) and I prefer using Coda to get the job done.
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