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About a week ago, Shadow Kingdom Records announced a new purchasing deal: For an upfront fee, customers receive an automatic discount on every order placed with the label’s webstore until the end of 2013.
$50 gives the customer a 20% discount on all orders
$75 gives the customer a 25% discount on all orders
$100 gives the customer a 30% discount on all orders
Anybody who wishes to partake in the deal must pay the fee by 3/31/2013. Share your coupon code, and they cut you off.
It looks like a great deal for the label’s customers and puts some cash in the label’s coffers right now, and as the sayings go, cash is king and money is more valuable today than it is tomorrow. Shadow Kingdom, the label and the webstore, specializes in obscure doom, power, and traditional metal, along with some pre-‘80s rock releases. The webstore does carry a good selection of extreme metal.
The math of the deal, the author’s method for doing the math:
I decided to analyze this deal from both the business’ perspective and from a customer’s perspective. I hunkered down in my mom’s basement, fired up Excel, cracked a 2-liter Jolt and a big bag of Cheetos, and told my mom and her friend to keep it down. If my math’s wrong, blame the Jolt and the Cheetos, but leave my mom out of it.
Here’s how the purchasing math breaks down, assuming a $13 CD or a $20 record, which is roughly the average price of said items in SKR’s webstore:
Discounted CD prices: $10.4, $9.80, and $9.10
Breakeven point at 20%: 20 CDs * $13 = $260 20 CDs * $10.4 + $50 fee = $258
Breakeven point at 25%: 24 CDs * $13 = $312 24 CDs * $9.75 + $75 fee = $309
Breakeven point at 30: 26 CDs * $13 = $338 26 CDs * $9.10 + $100 fee = $336.60
Discounted records: $16, $15, and $14.
Breakeven point at 20%: 13 records * $20 = $260 13 records * 16 + $50 fee = $258
Breakeven point at 25%: 15 records * $20 = $300 15 records * 15 + $75 fee = $300
Breakeven point at 30%: 17 records * $20 = $340 17 records * 14 + $100 fee = $338
Note that SKR carries some very rare items that command prices much higher than $13 and $20, respectively. Throw in some $18 CDs or $30 vinyl records, and the break-even quantities will decrease.
Who should take this deal, probably:
At this point, the reader is probably saying things like, “20 CDs is a lot of CDs,” or “20 CDs is a whole lot of CDs,” or perhaps “20 CDs is a fucking ton of CDs, and I want the author to explain why I’d ever do this deal, and I meant ‘a fucking ton’ in a figurative sense.” The reader is probably also balking at the upfront cost of at least $50, which buys a lot of beer or other things and stuff.
Vinyl record buyers should jump on this deal. $20 might be a common price, but plenty of stuff in the store is much more expensive. People who intend to purchase a lot of t-shirts, which are usually $25 in the store, should take the deal as well. Collectors and compact disc holdouts like me might want to do this as well, as long as they intend to purchase huge quantities of stuff. If you buy 50 CDs or 50 vinyl records at the 20% discount, you would save $80 and $150, respectively, then if you didn’t take the deal. However, that’s a ton of physical copies of music.
What would happen if the author took the deal, definitely:
If the author paid the $50 fee, here is what would happen over the next 9 months, probably:
Author: “No Remorse has two new CDs out. High Roller just released another obscure NWOBHM vinyl. I’ll buy those.”
Author: Clicks purchase
Author: “Metal on Metal has a new CD out. High Roller just released another obscure NWOBHM vinyl. I’ll buy those. Now that I think about it, I don’t have that other High Roller obscure NWOBHM vinyl yet. Oh, look at that, there’s a Marduk album I don’t have. I was going to buy that at the CM Distro, but since I already spent $50 for the discounted prices, I should buy here instead.”
Author: Adds another 7 CDs and 2 vinyl records to shopping cart, clicks purchase
Author’s credit card: “Fuck you, buddy.”
Author’s girlfriend: “Fuck you, buddy.”
Author’s girlfriend: Breaks up with author
Why this deal will work, maybe:
The people who take the deal will either remember the sunk cost and keep buying at SKR, or they’ll forget or ignore the fee, not buy enough to defray the cost of the fee, and the label will pocket the fee as profit. The label would prefer that people buy more stuff, because a minimum of 20 CDs or 13 vinyl records is a lot of product. However, the label wins benefits either way.
Summarize and conclude it, bro:
With physical media sales falling, Shadow Kingdom is trying to exchange higher profit-per-sale for greater quantity, lower profit-per-sale. Whether or not it works, it’s a good idea and a good tactic for pulling a limited and shrinking customer base away from other retailers and keeping them loyal.
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