02282013, 04:45 PM  #1 
Earning My Ears
Join Date: Aug 2011
Posts: 57

Formula for Price per Point
So I've crafted a formula that should help you calculate how much you should pay per point depending on your resort and the size of the contract. Essentially, I aggregated the data from the first page of the "Recently Passed ROFR" page, split the data into 3 "package sizes" (Small package = 100 points or less, Medium package = 101199 points, Large package = 200 points or more). The equation variables are explained below. Some of you might be asking, "But were some of the packages loaded and some stripped?" By aggregating the data, we're able to cancel out that effect. Also, I've only had time to do 4 DVC sites (AKL, BLT, BWV, VWL). If I have time, I'll add more.
Equation: **For VWL, subtract 2 from YL instead of 1**  RPPM = Resort Price Point Mean (find below) RYLM = Resort Year Left Mean (find below) YL = Years Left on your contract NP = Number of Points in contract PPM= Price per point for current Use Year and Banked Points (find below) CYP = Number of points received in the current Use Year BP = Number of points banked from previous years  So, If I was buying a small point package (100 points or less) at AKL, lets say 50 points with all points in 2013 but only 10 points from 2012 UY, this is how much I should pay: = $64.94 per point. So, a fair price per point (or average price) would be $64.94 per point for a 50 point contract at AKV with 50 current UY and 10 Banked points. As the years continue, this price will go down because I have less years on my contract. Hope this helps. The one thing this equation does not do is take into account the rarity of certain UY. So, if you're trying to hunt down a rare UY, you may need to pay more. This equation also does take into account MF or closing costs due at signing. Common sense usually says that seller pay CC, buyer pay MF (if package isn't stripped). One last disclaimer, these prices were taken from those contracts that passed ROFR, but DIS may decide to change their reasoning for ROFR without us understanding. I doubt this equation will hold up for years to come. For an even more accurate estimate, you'll probably need to multiply your final number times the inflation rate since Jan '13. Good hunting! (FYI I've got a contract submitted to ROFR at VWL (Sept) 240 pts, 201 in 2012, all the rest going forward. $60, Buyer pays MF, Seller pays closing.
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Bo
WL '10 PC '11 POR '13 YC' 13 Last edited by goodtmz37; 02282013 at 06:32 PM. 
02282013, 05:20 PM  #2 
Mouseketeer
Join Date: Feb 2010
Location: Illinois
Posts: 97

Say what???
(Do SSR next, please ) 
  

02282013, 05:36 PM  #3 
Mouseketeer
Join Date: Nov 2012
Posts: 149

I bought a VWL 200 all banked 2011 + all current 2012 for $55.
According to your formula the value is $64.05. I watched VWL for awhile before buying and there were a lot of contracts for less than $64 per point. In fact it seemed to me most large contracts were about $60 per point. So there is some problem with your formula vs what I've actually seen. My guess is your formula values Current Year points which don't seem like they should count. They should be a given. If I take off the current year point value in your formula from my contract it gives me a value of $58.40 which seems a little more reasonable. 
02282013, 05:52 PM  #4 
Love the Dis
Join Date: Feb 2013
Posts: 568

Ok, now someone needs to remind me. Is it addition and subtraction before multiplication and division?

02282013, 06:03 PM  #5 
DIS Veteran
Join Date: Jul 2011
Location: Connecticut
Posts: 1,945

PEMDAS
Parenthesis, exponents, multiplication and division, then addition and subtraction going from left to right. That being said, while I appreciate the formula, I do see a few flaws in it. The first is that I don't see any consideration of who paid closing costs or maintenance fees for those contracts, and those two factors greatly influence the price per point. So without that data the historical numbers are a bit misleading. Also, in the case of BWV your formula is essentially obsolete as the market has completely shifted since those numbers were posted. I think a more appropriate formula compares current contracts to each other in order to determine current relative value as opposed to using historical data.
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02282013, 06:10 PM  #6 
Earning My Ears
Join Date: Aug 2011
Posts: 57

Sorry I didn't say this earlier, but the VWL did not have as many respondents as I needed for a very accurate calculation (For those stats nerds out there, the sample size was not large enough to approximate a normal distribution. So, for the VWL formula, subtract 2 from the number of years left on your contract instead of subtracting 1. This should be more accurate.
To clarify, this is a very rough number, and should be a starting point for negotiations.
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Bo
WL '10 PC '11 POR '13 YC' 13 
02282013, 06:14 PM  #7  
Earning My Ears
Join Date: Aug 2011
Posts: 57

Quote:
Yes, the market will sway prices from time to time, but as I said, this should just be a starting point for negotiations. Don't take this as a hard and fast rule.
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Bo
WL '10 PC '11 POR '13 YC' 13 

02282013, 06:30 PM  #8 
Love the Dis
Join Date: Feb 2013
Posts: 568

thank you for PEMDAS... I would've sat up tonight trying to remember (and I'm not kidding)!

02282013, 09:24 PM  #9 
Earning My Ears
Join Date: Jan 2009
Posts: 31

Apparently I suck at math now, numbers I came up with don't make any sense.

02282013, 10:54 PM  #10  
DIS Veteran
Join Date: Aug 2008
Location: Victoria, BC, Canada
Posts: 1,606

Quote:
The two questions most buyers have is how to compare the value between two different contracts and what should an opening bid for a contract be. Comparing the value of two different contracts is quiet easy. A common mistake is to not include all costs and to not value the points that come with a contract properly. Determining an initial offer comes down to the total price you want to pay and splitting that out between $/point, closing costs and MF. All costs are negotiable, now where does it say buyers have to pay closing or MF. Remember that sellers are no better at determining the value of their contract then you are, so all you need to do is find one seller that will accept your offer. Once the search function comes back you can search for some of the old postings I made on this subject and the formulas I used.
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Last edited by DougEMG; 02282013 at 11:08 PM. 

02282013, 11:03 PM  #11 
DIS Veteran
Join Date: Aug 2008
Location: Victoria, BC, Canada
Posts: 1,606

For example given these contracts what what should one offer and how do they compare to each other
1) SSR asking $60 per point, 100 points per year, $450 closing costs, with no points to 2014. 2) SSR asking $65 per point, 200 points per year, $550 closing costs, with 200 current points and all future points. 3) BWV asking $70 per point, 300 points per year, $600 closing costs, with 200 points expiring in 3 months, 300 banked points and 300 current points.
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02282013, 11:19 PM  #12 
DIS Veteran
Join Date: Aug 2008
Location: Victoria, BC, Canada
Posts: 1,606

Here's an old post that you might find interesting
http://www.disboards.com/showthread.php?t=2916071 http://wwww.disboards.com/showthread.php?t=3002406
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Last edited by DougEMG; 02282013 at 11:25 PM. 
03012013, 06:20 AM  #13  
DIS Veteran
Join Date: Jul 2011
Location: Connecticut
Posts: 1,945

Quote:
With regards to the omission of maintenance fees and closing costs, I did read your full post and I recognize the fact that you did not include them. But your formula does not account for this absence and therefore your data is incomplete. From a cost perspective, there is no difference between someone who pays $60pp for a 150 point contract with the seller paying closing and maintenance fees and someone who pays $52pp for a 150 point contract plus closing and maintenance fees. But you are using $60 and $52 as separate data points even though in the greater scheme of things they represent the same out of pocket cost for the buyer. So what I am saying is that simply acknowledging that you did not include closing costs and maintenance fees is not enough. I am saying that by omitting them you are undermining the validity of your formula. Quote:
Again, I appreciate the work you did and am not trying to disrespect you. But I do think that you have failed to account for too many variables in this formula. Feel free to disagree.
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03012013, 07:02 AM  #14 
DIS Veteran
Join Date: Nov 2010
Location: NJ
Posts: 1,239

According to this formula my BLT purchase should have been $96.50 and I paid $95. Now being a math person I found this interesting, but of course it has flaws. The biggest flaw is "value". Value is different to each person. Market price is all you can go by and this formula attempts to show the current market values.
For me (even though I'm a math minded person) I keep it simple. Regardless of resort, when I bought I knew someone who would always rent to me at the current price of $10 per point. I believe she recently upped it to $11. So for me, my point cost had to be under that amount for it to be "worth it." If I could rent for slightly more why take on the commitment to buy? So I took the number of points and multiplied by the number of years left on the contract. For me that was 125 points and 48 years left (at the time of purchase). That gave me 6000 points plus 94 that were banked. 6094 total points. I then took the purchase price of $95 times 125(contract size) and that was $11,875 plus closing costs. I believe after negotiating closing and dues it was $12,500. I then divide the purchase price by the total points and it came to $2.05 per point. That's how much every point I own cost me. And the current price of dues of roughly $4.50 and my points this year are $6.52. It was less last year as dues were slightly lower. Next year will be slightly more. But it is far cheaper than renting....so it made it totally worth it for us. Now, for an even better comparison, if we didn't rent DVC and booked through disney for our upcoming trip in Dec for 3 nights it would cost $712 for carribean beach, or $813 for Coronado. We always booked moderate before DVC. Our trip we have a studio at BLT SV for 46 points (would be 55 for LV) at my cost of $6.52 per point that's $299.92 for SV or $358.60 for the LV. So regardless of any formula i'm clearly getting value for my purchase over direct disney rates, on top of a much better location and accommodations. Even if I got a 1 br for the trip I'm STILL getting a bargain. SV would be 90 points totaling $586.50 or 103 points totaling $671.56 for LV. Still a savings and FAR better accommodations than a regular room at a moderate.
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Coronado Apr 2009, BLT Feb 2011, SSR June 2011, DLR June 2012, BLT Nov 2012, OKW Mar 2013, SSR Aug 2013, BLT Dec 2013
Me DW DD(8) DS(4) Last edited by luckyman_apd; 03012013 at 07:07 AM. 
03012013, 10:30 AM  #15  
DIS Veteran
Join Date: Aug 2008
Location: Victoria, BC, Canada
Posts: 1,606

Quote:
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