Dynamic Pricing of Items Based on Estimated Demand For the Item

• US 20100241491A1
• Filed: 06/02/2010
• Published: 09/23/2010
• Est. Priority Date: 02/28/2001
• Status: Abandoned Application

• Current Assignee: Digonex Technologies Incorporated (Emmis Communications Corporation)
• Original Assignee: Digonex Technologies Incorporated (Emmis Communications Corporation)
• Inventors: Eglen, Jan Alan, Voils, Josh, Davis, Roger D., Eglen, Jeremy, Goldfinger, Todd, Schmidt, David Russell, Lindquist, Ephraim, Drapac, David, Dasbach, Garrick, Marmaros, David P., Bakke, Justin
• Application Number:
  US12/792,538
• Publication Number:
  US 20100241491A1
• Time in Patent Office: Days
• US Class Current: 705/10
• CPC Class Codes: G06Q 10/00 Administration; Management
• CPC Class Codes: G06Q 10/02 Reservations, e.g. for tickets, services or events
• CPC Class Codes: G06Q 20/201 Price look-up processing, e.g. updating
• CPC Class Codes: G06Q 30/00 Commerce
• CPC Class Codes: G06Q 30/02 Marketing; Price estimation or determination; Fundraising
• CPC Class Codes: G06Q 30/0206 Price or cost determination based on market factors
• CPC Class Codes: G06Q 30/0207 Discounts or incentives, e.g. coupons or rebates
• CPC Class Codes: G06Q 30/0222 During e-commerce, i.e. online transactions
• CPC Class Codes: G06Q 30/0267 Wireless devices
• CPC Class Codes: G06Q 30/0277 Online advertisement
• CPC Class Codes: G06Q 30/0283 Price estimation or determination
• CPC Class Codes: G06Q 30/06 Buying, selling or leasing transactions
• CPC Class Codes: G06Q 30/0601 Electronic shopping [e-shopping]
• CPC Class Codes: G06Q 30/0613 Third-party assisted
• CPC Class Codes: G06Q 30/0633 Lists, e.g. purchase orders, compilation or processing
• CPC Class Codes: G06Q 30/0635 Processing of requisition or of purchase orders
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

A method of dynamically adjusting prices of items using a processor based upon the demand for the item based upon offering the item at different prices during different time periods.

Claims

1. A method, comprising:

sending a first price of an item for sale from a processor to one or more clients over a network;

receiving one or more orders for the item at the first price from one or more of the clients;

determining demand for the item based at least in part on the one or more orders received;

delivering the item to the clients that ordered the item at the first price;

pricing the item at a second price with the processor based at least on the determined demand for the item; and

sending the second price over the network to at least one of the clients.

2. The method of claim 1, wherein the item wherein the item is selected from a group including music, text, a video content, a picture, tickets or software.

3. The method of claim 1, wherein said determining demand step includes estimating a demand curve for the item.

4. The method of claim 3, wherein said estimating a demand curve step includes the step of utilizing a logarithmic demand curve.

5. The method of claim 4, wherein the utilized logarithmic demand curve is expressed by the equation Log[q]=α

−

β

p, where Log[ ] is a natural logarithm, q is the quantity of an item, p is the price of the item and α and

β

are parameters.

6. The method of claim 5, wherein the values of α

and β

are estimated utilizing data observed through sales of the item.

7. The method of claim 1, wherein said delivering the item includes transmitting the item from the processor to the clients that ordered the item at the first price over the network.

8. A method, comprising:

establishing a first time period;

sending a first price of an item for sale from a processor to one or more clients over a network during the established first time period;

receiving one or more orders for the item at the first price from one or more of the clients during the established first time period;

storing the first price and quantity of the orders received for the item during the established first time period in memory accessible by the processor;

establishing a second time period;

sending a second price for the item for sale from the processor to one or more clients over a network during the established second time period;

receiving one or more orders for the item at the second price from one or more of the clients during the established second time period;

storing the second price and quantity of the orders received for the item during the established second time period in memory accessible by the processor;

calculating using the processor whether a profit realized for sales of the item during the first time period is greater than a profit realized for sales of the item during the second time period utilizing a cost of the item (c) and the stored first price (p₁) and quantity of the orders received (q₁) for the item during the established first time period and the stored second price (p₂) and quantity (q₂) of the orders received for the item during the established second time period;

utilizing an estimated demand curve to set a third price (p3) for the item during a third time period wherein the third price is selected as an estimate of the price that will optimize profits.

9. The method of claim 8, wherein said utilizing an estimated demand curve step includes the step of utilizing a logarithmic demand curve.

10. The method of claim 9, wherein the utilized logarithmic demand curve is expressed by the equation Log[q]=α

−

β

p, where Log[ ] is a natural logarithm, q is the quantity of an item, p is the price of the item and a and 13 are parameters.

11. The method of claim 10 wherein the third price (p₃) is calculated utilizing the equation:

12. The method of claim 11 further comprising estimating a value for β

is estimated utilizing the stored first price (p₁) and quantity of the orders received (q₁) for the item during the established first time period and the stored second price (p₂) and quantity (q₂) of the orders received for the item during the established second time period.

13. The method of claim 12 wherein the estimating a value for β

step includes utilizing the equation;

14. The method of claim 8 wherein the first time period and the second time period are of equal duration.

15. The method of claim 8 wherein a dampening function is utilized to limit fluctuations between the third price and the second price.