We are releasing a "suggested price" feature in October that can be used as a reference for setting both bid and ask prices. It will replace the U.S. retail average column in Marketplace listings and will be accessible in other places too along with all of the relevant supporting detail in a pop-up window.
Our goal is to create pricing transparency to all Marketplace participants as to what is considered "fair market" pricing.
Suggested price algorithm and rationale
The suggested price will be based on applying the following algorithm. The first step in the sequence which yields a result will be the suggested price displayed.
- Marketplace average from the last 12 months - The Marketplace itself is obviously the best source of information if the results exist. This is a volume-weighted average meaning that we first sum the bid values in the past 12 months and then divide by the sum of the bottles involved in those bids. As the transaction history of the Marketplace builds, this will become a more useful resource than it is today given the short time since the Marketplace was released.
- Auction average from up to the past 24 months - Auction price results (inclusive of buyer's premiums) from major auction houses as reported on WinePrices.com are used to determine an alternative measurement of actual auction results. Our methodology is to go back an initial 12 months to determine if we can gather 6+ results. If we can, we average all results in the 12 month period and display that as the suggested price. If not, we go back a further 12 months and apply the same test. If we obtain a total of 6+ results over 24 months, then we weight average each year's listings 60/40 to provide more weight to more recent results. If we cannot achieve 6+ listings in 24 months, rather than continue adding older auction prices, we go to the next step.
- Current U.S. low retail price - While any retail price is, in effect, an asking price (i.e., not necessarily representative of any completed sales at that price), we felt that after 2 years of auction data, the advantages of using more current information outweighed the benefits of focusing solely on completed transaction data. We use retail price data from Global Wine Stocks as displayed on WinePrices.com to determine the current lowest U.S. retail price. It sometimes happens that data on the extremes may represent an outlier or incorrect price but users will be able to seamlessly access the underlying retail listings to check if perhaps the next higher price is a better reference or if the low price displayed might have been matched to the wrong wine.
- Auction average from up to the past 48 months - One only gets here if there is no current U.S. retail data. At this point, some pricing is better than nothing so we first attempt to reach 6+ auction listings by adding a third year. If successful the data is weighted 50/30/20 for each year. Otherwise, we will add the 4th year of data and use all available data (even if less than 6 data points) to propose a price (each year is weighed in the ratio of 6/4/2/1 or 46/31/15/8 on a 100 point scale.