User avatar
arnoudk
Bronze Bitcoiner
Bronze Bitcoiner
Posts: 631
Joined: Wed Oct 21, 2015 4:04 am
Location: Belize

Understanding the Purse.io system

Sun Dec 13, 2015 5:37 am

I've done some simple analysis on the purse.io system, in order to get a better understanding of the impact of selecting a specific discount rate. What I have done is quite rudimentary, but it gives an idea. I've added a $25 amazon gift card in my wish list, imported this into Purse and changed the slider to go through all the possible discounts. Then, for each discount, I put the purse fee, success rate and delivery estimates into a spreadsheet. After that, I created a few charts to get a better feel for the data.

First, I noticed that the discount selected in "Name your discount" is not the discount that Purse gives. What Purse does, is it takes the price of the item, takes off the discount, but then adds on their fee. The discount you name, is the discount before their fee. So I decided to plot the Purse Discount against the Actual Discount (where the purse fee is subtracted and the discount recalculated). You can see that selecting 50% discount only gives just over a 35% discount after fees.
Image

I also noticed that the fee that Purse charges is 1% (up to 10% selected discount), and then increases exponentially. So I plotted this in a graph too. You can see that the high discounts result in a high fee. Selecting 50% discount results in a slightly above 14% fee.
Image

Of course, the higher the fee you select, the lower the probability of your order being fulfilled. They give an estimate on their website, so I decided to plot that in a graph too. I expected this graph to go down in a smooth line (probably exponentially), but it appears to go down linearly in a stepping fashion. Initially, there is a low impact on success for small increases in selected discount - but there is a tipping point at around the 12% mark.
Image

Last but not least, I was curious what the purse estimate graph for delivery times looked like. So I plotted their estimated delivery times. Where they gave a range, I chose the upper number for this range. In the end, they give '20+' estimates with no upper value, so I just took that value. You can see that it increases quite linearly up until 44% and then increases significantly.
Image

It would be interesting to plot the data from the merchant section of Purse, to get a feel for at what discount level people are placing their orders. I guess I could check that list every so often to get an understanding of how long it takes for an order to be removed from that list. Maybe another day! I thought it would be fun to share this data here.
Excited about the potential of Bitcoin Cash in the beautiful country of Belize.
Developer of the RegisterDocuments.com Document Registration Service (using the Bitcoin Cash blockchain).

User avatar
ronnieb
Nickel Bitcoiner
Nickel Bitcoiner
Posts: 177
Joined: Sat Oct 03, 2015 6:15 pm
Location: Idaho
Contact: Website Facebook

Re: Understanding the Purse.io system

Sun Dec 13, 2015 6:12 am

I've done some simple analysis on the purse.io system, in order to get a better understanding of the impact of selecting a specific discount rate. What I have done is quite rudimentary, but it gives an idea. I've added a $25 amazon gift card in my wish list, imported this into Purse and changed the slider to go through all the possible discounts. Then, for each discount, I put the purse fee, success rate and delivery estimates into a spreadsheet. After that, I created a few charts to get a better feel for the data.

First, I noticed that the discount selected in "Name your discount" is not the discount that Purse gives. What Purse does, is it takes the price of the item, takes off the discount, but then adds on their fee. The discount you name, is the discount before their fee. So I decided to plot the Purse Discount against the Actual Discount (where the purse fee is subtracted and the discount recalculated). You can see that selecting 50% discount only gives just over a 35% discount after fees.
Image

I also noticed that the fee that Purse charges is 1% (up to 10% selected discount), and then increases exponentially. So I plotted this in a graph too. You can see that the high discounts result in a high fee. Selecting 50% discount results in a slightly above 14% fee.
Image

Of course, the higher the fee you select, the lower the probability of your order being fulfilled. They give an estimate on their website, so I decided to plot that in a graph too. I expected this graph to go down in a smooth line (probably exponentially), but it appears to go down linearly in a stepping fashion. Initially, there is a low impact on success for small increases in selected discount - but there is a tipping point at around the 12% mark.
Image

Last but not least, I was curious what the purse estimate graph for delivery times looked like. So I plotted their estimated delivery times. Where they gave a range, I chose the upper number for this range. In the end, they give '20+' estimates with no upper value, so I just took that value. You can see that it increases quite linearly up until 44% and then increases significantly.
Image

It would be interesting to plot the data from the merchant section of Purse, to get a feel for at what discount level people are placing their orders. I guess I could check that list every so often to get an understanding of how long it takes for an order to be removed from that list. Maybe another day! I thought it would be fun to share this data here.
Oh, that's great... would love to see your charts and data!! I do feel purse.io does charge a lot for their fees... but so far it's been very rewarding for me to use so I can't complain too much.

Also FYI... They never let me buy gift cards. I was only able to buy gift cards one time and never again. so I am surprised you were able to use one for your experiment.

EDIT: oops... chart images are visible now... they weren't initially for whatever reason.

User avatar
arnoudk
Bronze Bitcoiner
Bronze Bitcoiner
Posts: 631
Joined: Wed Oct 21, 2015 4:04 am
Location: Belize

Re: Understanding the Purse.io system

Sun Dec 13, 2015 6:06 pm

Also FYI... They never let me buy gift cards. I was only able to buy gift cards one time and never again. so I am surprised you were able to use one for your experiment.
I was not able to add all gift cards into my wishlist at Amazon (the ones with email delivery did not seem to work - that would just have been perfect for my usecase). But this 'christmas edition' worked fine.
Image

Although I must say I have not tried to go any further, so it may check against buying gift cards.

Also, at Amazon, you cannot buy a gift card with a gift card balance. So it is not possible to regift gift cards once they have been activated.
Excited about the potential of Bitcoin Cash in the beautiful country of Belize.
Developer of the RegisterDocuments.com Document Registration Service (using the Bitcoin Cash blockchain).

User avatar
arnoudk
Bronze Bitcoiner
Bronze Bitcoiner
Posts: 631
Joined: Wed Oct 21, 2015 4:04 am
Location: Belize

Re: Understanding the Purse.io system

Sun Dec 13, 2015 10:01 pm

To be honest, I'm in a bit of a shock after looking more closely at the fees that are charged. I wondered how much is charged in fees, for every percent that the purse discount is increased. To put it another way, if you have selected a 49% discount, you end up paying x. If you then select a 50% discount, you end up paying y. I looked at the difference between y and x as a percentage of the item price. This is the percentage of the item that goes to Purse. Then, I compared that to the percentage that goes to the customer. I almost fell off my chair to see that an increase from 49% to 50% discount results in 96% of that "saving" going to purse and just 4% going to the customer! (Of course, for lower discounts, that is much less extreme).

Image

In the example, at 49% discount, the purse fee is $3.36 on my $25 item. At 50% discount, the purse fee is $3.60 for this same $25 item. I increased the discount 1%, and 1% of $25 is $0.25. The purse fee increased $0.24. So, $0.24 of that last 1% saving goes to purse and $0.01 goes to me. $0.24 / $0.25 = 96%.
Excited about the potential of Bitcoin Cash in the beautiful country of Belize.
Developer of the RegisterDocuments.com Document Registration Service (using the Bitcoin Cash blockchain).

User avatar
arnoudk
Bronze Bitcoiner
Bronze Bitcoiner
Posts: 631
Joined: Wed Oct 21, 2015 4:04 am
Location: Belize

Re: Understanding the Purse.io system

Sun Dec 13, 2015 10:41 pm

It is also possible to look at the Purse Fee as a percentage of the discount selected. For example, when selecting a 2% discount, the discount is split evenly between purse and the customer: 1% goes to the customer and 1% goes to purse. In this case, purse has a 50% share of the discount selected. At 50%, the actual discount is 35.6%. Purse has 14.4% of the fees (or 14.4/50 = 28.8%).

I plotted this in a graph for all different discounts:
Image

Spend bitcoins. Save money.
Customers saved over $500k this year!
I really hope the purse costs can come down with increased use. I do understand that they need to charge fees to cover development and operational expenses, and more usage would hopefully lead to lower prices.

If I assume that the purse statement "customers saved..." refers to the "Purse Discount" and not the "Actual Discount", and if we assume that, on average, people select a 25% discount, then purse earns 10.88% of $500.000 , or approx $50k. That is not a lot of money to pay staff and development... so in this perspective the fees are required for this to operate!
Excited about the potential of Bitcoin Cash in the beautiful country of Belize.
Developer of the RegisterDocuments.com Document Registration Service (using the Bitcoin Cash blockchain).

User avatar
ronnieb
Nickel Bitcoiner
Nickel Bitcoiner
Posts: 177
Joined: Sat Oct 03, 2015 6:15 pm
Location: Idaho
Contact: Website Facebook

Re: Understanding the Purse.io system

Sun Dec 13, 2015 11:46 pm

I really hope the purse costs can come down with increased use. I do understand that they need to charge fees to cover development and operational expenses, and more usage would hopefully lead to lower prices.

If I assume that the purse statement "customers saved..." refers to the "Purse Discount" and not the "Actual Discount", and if we assume that, on average, people select a 25% discount, then purse earns 10.88% of $500.000 , or approx $50k. That is not a lot of money to pay staff and development... so in this perspective the fees are required for this to operate!
The nice thing about purse's high fees is there is an open door for a competitor!!! And competition is great for us consumers!!!!!

User avatar
arnoudk
Bronze Bitcoiner
Bronze Bitcoiner
Posts: 631
Joined: Wed Oct 21, 2015 4:04 am
Location: Belize

Re: Understanding the Purse.io system

Sat Feb 20, 2016 2:03 am

Earlier today, I did a very high level analysis of the order book at Purse.io to understand how people are pricing the discounts that they would like to receive from the orders.

Here's the graph:
Image

On the x-axis I have plotted the discount percentage as selected by the buyer. On the y-axis I have plotted the value of the order BEFORE discount. I have limited the graph to USD orders in the states, only, as I didn't want to deal with currency exchanges.

There is no real pattern to be seen here. Requests are pretty much all over the place.

Unfortunately I do not have any data that shows which orders get fulfilled, and how long that takes. It would be nice to turn this into a bulb graph - but I just don't have the data.
Excited about the potential of Bitcoin Cash in the beautiful country of Belize.
Developer of the RegisterDocuments.com Document Registration Service (using the Bitcoin Cash blockchain).

User avatar
BitcoinNewsMagazine
Nickel Bitcoiner
Nickel Bitcoiner
Posts: 217
Joined: Thu Sep 24, 2015 5:03 pm
Contact: Website Facebook Twitter

Re: Understanding the Purse.io system

Sat Feb 20, 2016 5:29 pm

Very nice work! Thanks for taking the time.

Return to “Bitcoin Discussion”

Who is online

Users browsing this forum: No registered users and 6 guests