Simple pricing formula incorporating factors with varying importance

[bananasking]

Hi, I have something in mind that I'm having difficulty incorporating into a formula. Or maybe I'm just confusing myself.

Suppose I have an inventory of cars and I want to price them accordingly based on a series of factors e.g. top speed, fuel economy, safety, comfort, styling, reliability and so forth. Each factor will inherently be weighted according to its importance, so I could determine fuel economy to be the most important factor and be weighted as such relative to the other factors.

a) How do I go about pricing each and every car with a formula that incorporates all the different factors with their different weights? How different will it be if I'm using a minimum price as my base value as compared to using an average selling price as my base value?

b) If I take it a step further and price every car less for an older model, i.e. 1% less for each year, how do I adjust the formula?

Thanks in advance everyone.

[Sam Capricci]

Have you looked at how, for example, Car & Driver rank their test cars?
they assign values from 1 to 10 on things like price, comfort, ergonomics, rear seat comfort, cargo space, acceleration, fuel economy, performance etc.
then they sum them and take the total. If one seems more important to you you could assign a weight to it, for example in a recent article I saw them do a head to head of a corvette and a Porsche but since the price of the Porsche was almost 3 times the corvette the reduced the value they would assign to the price category (one was over $100k US and the other over $300k US).
You ought to assign values - pick a standard - like 1 to 10 for every category and don't vary from it. It probably would also help to have a location where you put notes that explain your criteria for that category.
Or you could pick up a copy of Consumer Reports to see how they rank the various models.
Good luck.

[bananasking]

Have you looked at how, for example, Car & Driver rank their test cars?
they assign values from 1 to 10 on things like price, comfort, ergonomics, rear seat comfort, cargo space, acceleration, fuel economy, performance etc.
then they sum them and take the total. If one seems more important to you you could assign a weight to it, for example in a recent article I saw them do a head to head of a corvette and a Porsche but since the price of the Porsche was almost 3 times the corvette the reduced the value they would assign to the price category (one was over $100k US and the other over $300k US).
You ought to assign values - pick a standard - like 1 to 10 for every category and don't vary from it. It probably would also help to have a location where you put notes that explain your criteria for that category.
Or you could pick up a copy of Consumer Reports to see how they rank the various models.
Good luck.

How should I incorporate them into the price though? Given that I want to price a base model at for example $1,000?

[Sam Capricci]

A couple things, first you don't need to quote a post if it is the immediate post before that you are responding to, the admins don't like it as it adds clutter. And if there are multiple posts you can always address the person by handle or post # like I'm replying to post #3.
Second and this is my fault, I misread your original post thinking you were trying to set up a system to BUY an auto based on some consistent criteria instead of selling one.
We have the Kelly Blue Book (kbb.com) that lists prices of used autos for reference.
So I'm uploading a sample of how it might be done.
But I'm not in that business so I can only give you some guesses about how to set up a price.
you can substitute what you want in C1 and the numbers down that column will change.
you can also change the percent values in column E and get higher totals.
hope that helps give you something to think about.

[bananasking]

Thanks. I'll look into it.

[bananasking]

It's becoming a bit like a math question for me actually. I'm trying to get my head around the problem that I've scored the cars in a really fair and systematic manner but I'm not sure how I can create a pricing formula based on the scores.

[JeteMc]

Seems as if you could put the base price in cell F1 then populate a price column using:

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By the way if you'll modify formula in cell H3 as follows then you can just drag it down the column:

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As a side note, I realize that this is only an example, however I would hope that the importance of the engine and transmission is greater than that of the tires.
Let us know if you have any questions.