In this blog I want to provide some information on how I price NPN’s. There are a number of ways to come up with pricing for NPN’s. Many of you are familiar with Scott Carson’s stair step pricing model for NPN’s, which is the one that I use as a starting point for developing bids. In case you aren’t, it goes like this:
If FMV > $50,000, then bid 55% of FMV
If FMV > $40,000, then bid 45% of FMV
If FMV > $30,000, then bid 35% of FMV
If FMV <$30,000, then bid 25% of FMV
This is a great starting point for coming up with bids. But I prefer to use a ‘ramp’ model instead of a step model. For example, if the FMV is $45,000, then you should probably be using 50% of FMV instead of 45%. Suppose you have 2 assets on a tape and one has a FMV of $50,500 and the other has a FMV of $49,500, are you really going to bid $5,000 more for the $50,500 asset?
In my ROI calculator I use a ramp model and I can input these values and calculate the pricing. But I often analyze tapes with 100+ assets, and putting each of those assets individually into my ROI calculator isn’t really feasible. What I realized I need to do is be able to perform the ramp analysis within a tape spreadsheet. So I came up with an easy way to do that.
In this video I show you how to take the stair step model and turn it into a ramp, and I also address the problem of how to calculate these starting bids on a tape spreadsheet and show you step by step how to do it.
I hope you find this helpful, and will let me know if you have other ways of doing this.
Here is the link to the video: https://www.youtube.com/watch?v=bQ9ItPpYu7c