PC question

I have worked out that after commission and PC we would have a net profit of £162. Not sure if this is correct but I've worked it out so:

After commission: £100*0.95=£95*2=£190

After PC: 10/190=0.053; (((0.20-0.053)=0.147)*190)=27.93 so £190-£27.93=£162.07 < sorry about that!...

No you haven't done your sums correctly. The above PC, and net profit after PC, calculations are incorrect.

Assuming that you are fully liable to maximum weekly premium charge, on a commission rate of 5% and make the profits on the markets as stated above, the correct calculation is as follows:

Wins: £200
Losses: £0
Gross Profit: £200
Commission Paid: £10 (0.05*200)
Implied Commission: £0
Commission Generated: £5 ((10+0)/2)
Other Charges: £0
Maximum Weekly Premium Charge: £35 (0.2*200 - 5)
Net Profit (after commission & applied PC): £155 (200-10-35)

As your calculations are incorrect I didn't consider the rest of your post relevant.

The rule is this:

If you're on a commission rate below 3% you gain massively by being more marginal (going from winning 1000 and losing nothing to winning 10000 and losing 9000 for instance.

If you're on a commission rate above that, winning as much as possible is preferable, although your real goal if your ambitious should be to get to sub 3% asap.

Here's some calcs, and your own example below (although you wouldn't be on 5% for long with +500 and -300 pnls.

2%                           
Win    Lose     GP    CommPay    CommGen    PC    NET    Charges(%)
100,000    50,000    50,000    2,000    1,750    8,250    39,750    20.5
110,000    60,000    50,000    2,200    2,000    8,000    39,800    20.4
200,000    150,000    50,000    4,000    4,250    5,750    40,250    19.5
                           
5%                           
Win    Lose    GP    CommPay    CommGen    PC    NET    Charges(%)
100    50    50    5.00    3.25    6.75    38.25    23.50
110    60    50    5.50    3.65    6.35    38.15    23.70
200    150    50    10.00    7.25    2.75    37.25    25.50



as a 20% PC payer making 200GP per week on 5% commission without losses (which includes your green book of £100 x2 per week scenario) your net profit would be:

after commission:
200-10=190
after pc:
190-(200*.2-5)=155

so you are left with £155 net and have paid 22.5% in charges (and generated 20%)

with the +300 / -100 2 markets scenario

after commission
200-15=185
after pc:
185-(200*.2-18)=154

+500 / -300
=175-(200*0.2-17)=152

The following applies to a PC payer. The allowance is ignored. This will be correct for any period ending in a week in which PC was paid. Obviously a large losing week will skew the figures.       
       
Commission Rate (%)    Max charges paid     Min Charges Paid
5    26.9%    22.5%
4    24.6%    22.0%
3    21.5%    21.5%
2    21.0%    17.2%

Before the events have finished we decide that we will take a position all the time and we bet £200 @Evens on one of the teams in both events. So now we have +300 and -100 on both events. We do this every week and we get one winner and one loser each week. Now if we do our sums again (not exactly as the above calculation due to Implied Commission), we find that we have made a net profit of £166.

On reflection I will provide the calculations for your second example too. It's relevant to the extent that you would be misguided if you perceived that betting in that manner would increase your net profit in the short term to medium term (assuming the same conditions as above):

Wins: £300
Losses: -£100
Gross Profit: £200
Commission Paid: £15 (0.05*300)
Implied Commission: £3 (0.03*100)
Commission Generated: £9 ((15+3)/2)
Other Charges: £0
Maximum Weekly Premium Charge: £31 (0.2*200-9)
Net Profit (after commission & applied PC): £154 (200-15-31)

Thank your time and effort jt and Investor, helps me see things a bit clearer now.

I am surprised that the changed betting strategy in my original post means decreased profits, especially considering (in real life) the variancy. Would there be another strategy that might work? 

As the changed betting strategy increases Commission Generated, would I be right in assuming this would soften the transition from PC2 to PC3, i.e. pay 40% instead of 50% or 60%?

I think I have another question, but I don't know what it is yet.

I'll take your comments on board and have another play with my spreadsheet and see how much further I get. Though I might have a better understanding of PC, I'm starting to think it's futile trying to optimise a strategy on smothering PC.

Thanks again both of you.

Firstly, I apologise for the tone of my original post which, on review, was at best abrupt.

In my opinion, most legitimate PC reduction strategies simply aren't worth the time and effort required for most PC payers on a commission rate of 4% plus. It may be worth it if you're in a position to reduce your commission rate to 3% or you expect to reach the 250k PC3 mark in the next few years but the relevant PC3 limits and charge rates could alter in the meantime.

If you increase your commission generated as a percentage of gross profit it would soften the transition from PC2 to PC3. Nevertheless, it's worth noting that in the second example you posted above, your commission generated is only 4.5% of your gross profit (9/200) which would still result in PC3 at the highest rate of 60% if applicable.

The PC has generated a considerable amount of debate and analysis on the general betting forum and it may be worth your while searching through some of the previous threads.

No need to apologise jt.

My Comm Gen+Other Charges/Gross PL currently stands at 8.5%. I have 2-3 years to PC3, so although it might help to get the Comm Gen up that little bit, it's like you say - the goalposts may move again.

I'll have a search through the forum for related PC threads in the next few days.

Cheers.

i am only 20 and new to this game but a bet u lot had a field day pre 2007 where there were no PC.was it just 5% commission?

no, on the asians it was 1%