TEARDOWN & CONSIGNMENT Dynamic Pricing
Stop guessing. Price from the data.
The current market is nothing if not turbulent. The global events impacting on the aviation industry are not under control and component pricing is subject to the vagaries of these as well as the normal market changes to which we adapt. Our experience has been that the pricing of components has not been as impacted as the pricing of the whole assets from which they come, however decisions are being made around the impact that is made.
So we built a model that moves as fast as the market. It combines the latest sales and quotes with stock levels, demand tier, time between sales, RFQ frequency, the effect of condition and market-segment weighting, by PN, MSN, ESN or CSN. The result: we price to what the market will pay, as soon as it will pay it. Here’s what that gets you.
First: Increased probability of return on sales
Knowing the market price is just a starting point and should not be taken as a fixed point. The art of negotiation is as strong as ever, knowing the market price just puts you in a better position to negotiate. Gives you a better chance to get into the process, ensures that your anchor price is the best possible price and with the dynamic price list having min/max pricing across AR and SV conditions along with visibility on min/max repair pricing you are negotiating on the basis of timely data.
Second: Increased accuracy of forecasted consignment returns
De-risking is one of the main reasons consignors choose OPTIC, and the monthly forecast of end-of-project returns is at the heart of it. Dynamic pricing drives that forecast, so consignors see what is coming for cash flow and timing and plan for it, instead of being caught out by it.
Third: Earlier clarity on adjusting to meet consignment expectations
Project contribution deserves its own article. For now: dynamic pricing feeds it and shows early when market conditions, or consignment expectations, are drifting. That lets us change how parts are packaged and sold, trading timeframe against return while it still makes a difference.
The Cut & Thrust of The Right Price
At the end of the day AI is just an algorithm, dynamic pricing and the contexts it feeds into are also algorithms – albeit much simpler ones. Like all algorithms they rely heavily on the information that is fed into them. This can change depending on the context of an aircraft.
Legacy AC: Those aircraft where there has been many teardowns and a plentiful supply of data is available. Our ideal scenario is 10 MSNs of an aircraft type processed within the last two years. So A320 Family, 737 Family.
Mid Life AC: The A380 comes to mind here, SellUe have been involved in seven teardowns and a dynamic model started early to generate a price list. Where there is less than the optimal number available and consequently some gaps in available data, usage rates across related AC is user to identify probable tier level and corresponding CLP% used.
New AC: Boeing 787s and A320 NEO have been processed, while there may be information available across landing gear and APU there is a significant lack of data available to determine teardown values. Deeper market dives are undertaken and a heavier reliance on demand profile across common components across related aircraft and CLP pricing are used while market information grows.
So, a mix in terms of the levels of quality data available, however every teardown must start somewhere. Building on a known set of data is preferable to winging it (pun intended), the very nature of it being dynamic means that it is constantly evolving with an increasing accuracy and consequential improvement in outcomes.
More to Come
A lot of this culminates in the value that project contributions allow in relation to part sales. Looking forward to getting into that article.
The Bottom Line
Nothing here changes the mission: squeeze enough extra value out of a retiring asset so that choosing SellUe/OPTIC is the obvious call — more money for you, more business for us. The only question is whether you believe we can deliver.
You decide if our next level is enough.
SellUe is a Teardown & Consignment (T&C) Project Management company with a dedicated T&C digital platform called OPTIC. If you would like more information, please visit www.sellue.com.