System and Method for Generating Revenues in a Retail Commodity Network

• US 20080306789A1
• Filed: 02/12/2008
• Published: 12/11/2008
• Est. Priority Date: 02/12/2007
• Status: Abandoned Application

• Current Assignee: Pricelock, Inc.
• Original Assignee: Pricelock, Inc.
• Inventors: Painter, Scott, Fell, Robert M., Bonsignore, Michael R., Gros, Thomas D., Magnuson, Gary A., Reed, Brian P.
• Application Number:
  US12/030,073
• Publication Number:
  US 20080306789A1
• Time in Patent Office: Days
• US Class Current: 705/7
• CPC Class Codes: G06Q 10/0635 Risk analysis of enterprise or organisation activities
• CPC Class Codes: G06Q 10/06375 Prediction of business process outcome or impact based on a proposed change
• CPC Class Codes: G06Q 30/02 Marketing; Price estimation or determination; Fundraising
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

Embodiments disclosed herein provide viable revenue models for a service provider that offers price protection on a retail commodity to businesses as well as individual consumers in a retail commodity network. Specifically, embodiments disclosed offer a plurality of revenue flows in which the cost incurred by a service provider to offer hedge positions associated with a retail commodity can be offset in a variety of ways to cover the operating expenses and generate realistic profits. In some embodiments, a revenue model for a service provider in a retail commodity network may be built depending upon whether hedging cost information is generated internally or obtained externally. Such cost may be passed on to a customer entirely, none at all, or somewhere in between. Embodiments disclosed herein further provide a plurality of revenue sources and ways to generate revenues therefrom.

Claims

1. A method for generating revenues in a retail commodity network, comprising:

generating or obtaining hedge cost information as input to a revenue model, wherein the hedge cost information includes costs associated with hedging a commodity on a wholesale basis;

determining whether to pass none, some, or all of the costs to a customer, wherein the customer is an individual user or a commercial entity;

engaging one or more revenue sources specified in the revenue model; and

aggregating a total net revenue per unit of the commodity from the one or more revenue sources.

2. The method of claim 1, wherein the commodity is gasoline.

3. The method of claim 2, wherein the hedge cost information contain a matrix of strike prices and a matrix of insurance prices corresponding to the strike prices.

4. The method of claim 3, wherein each of the insurance prices represents a hedge cost per gallon for insuring against a risk of the customer depleting a virtual gas tank of the gasoline when retail prices of the gasoline exceed the customer'"'"'s lock price.

5. The method of claim 4, further comprising warehousing and managing the risk.

6. The method of claim 5, further comprising laying off the risk on an open market.

7. The method of claim 3, wherein the matrix of strike prices contains a plurality of parameters including strike prices for fuel grade per gallon, sensitivities, location, and duration.

8. The method of claim 3, further comprising determining an amount of the insurance prices to be passed on to the customer.

9. The method of claim 1, further comprising determining a range of strike prices tailored for the customer, wherein each of the strike prices corresponds to a certain percentage of price protection coverage for the commodity.

10. A computer-readable medium carrying program instructions executable by a processor to perform:

generating hedge cost information as input to a revenue model, wherein the hedge cost information includes costs associated with hedging an energy commodity on a wholesale basis and wherein the revenue model specifies one or more revenue sources;

determining whether to pass none, some, or all of the costs to a customer, wherein the customer is an individual user or a commercial entity; and

aggregating a total net revenue per unit of the energy commodity from the one or more revenue sources.

11. The computer-readable medium of claim 10, wherein the energy commodity is fuel.

12. The computer-readable medium of claim 11, wherein the hedge cost information contain a matrix of strike prices and a matrix of insurance prices corresponding to the strike prices.

13. The computer-readable medium of claim 12, wherein each of the insurance prices represents a hedge cost per gallon for insuring against a risk of the customer depleting a virtual gas tank of the fuel when retail prices of the fuel exceed the customer'"'"'s lock price.

14. The computer-readable medium of claim 13, wherein the program instructions are further executable by the processor to perform warehousing and managing the risk.

15. The computer-readable medium of claim 12, wherein the matrix of strike prices contains a plurality of parameters including strike prices for fuel grade per gallon, sensitivities, locations and duration.

16. The computer-readable medium of claim 15, wherein the program instructions are further executable by the processor to determine an amount of the insurance prices to be passed on to the customer.

17. A system comprising:

a processor;

a computer-readable medium carrying program instructions executable by the processor to perform;

generating hedge cost information as input to a revenue model, wherein the hedge cost information includes costs associated with hedging a commodity on a wholesale basis and wherein the revenue model specifies one or more revenue sources;

determining whether to pass none, some, or all of the costs to a customer, wherein the customer is an individual user or a commercial entity; and

aggregating a total net revenue per unit of the commodity from the one or more revenue sources.

18. The system of claim 17, wherein the hedge cost information contain a matrix of strike prices and a matrix of insurance prices corresponding to the strike prices.

19. The system of claim 18, wherein the commodity is fuel, wherein each of the insurance prices represents a hedge cost per gallon for insuring against a risk of the customer depleting a virtual tank of the fuel when retail prices of the fuel exceed the customer'"'"'s lock price.

20. The system of claim 18, wherein the matrix of strike prices contains a plurality of parameters including strike prices for fuel grade per gallon, sensitivities, location, and duration.