Method and system for dynamic pricing
First Claim
1. A computer-implemented method for dynamically determining an optimal price to be charged for a product on an Internet website operated by an Internet merchant, said method comprising the steps of:
- (a) receiving configuration data from the Internet merchant, wherein such configuration data comprises a sample size of visitors to the Internet website who are to participate in experiments and time-related information concerning the experiments;
(b) randomly choosing visitors to the website to participate in the experiments according to the configuration data;
(c) running the experiments according to the configuration data on the randomly chosen visitors to create a model that reflects current market sensitivities concerning the product;
(d) determining the optimal price for the product using the model acquired in step (c) by electronic manipulation using a processor; and
(e) displaying the optimal price to the Internet merchant.
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Abstract
The method and system of the present invention enables Internet businesses to conduct real-time, online experiments on a sample of transactions to determine marketplace sensitivities. Analysis of the results of the experiments reveal optimal values of key market decision variables such as price, content of banner ads, promotion levels, quantity discount schemes, etc. The experiments may be automatically conducted on an on-going basis, or may be conducted on a periodic basis. The method and system of the present invention preferably allow users to modify the nature of the experiment and the propagation of optimal values. The method and system of the current invention can be used for a pure diagnostic purpose or to automate the setting of key market variables. The dynamic experimentation used by the inventive system reveals the relative stability (or instability) of the networked market within which the business operates. The translation of an optimal value for a key variable (for example, price) to the entire market can be done on a real-time basis.
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Citations
20 Claims
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1. A computer-implemented method for dynamically determining an optimal price to be charged for a product on an Internet website operated by an Internet merchant, said method comprising the steps of:
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(a) receiving configuration data from the Internet merchant, wherein such configuration data comprises a sample size of visitors to the Internet website who are to participate in experiments and time-related information concerning the experiments; (b) randomly choosing visitors to the website to participate in the experiments according to the configuration data; (c) running the experiments according to the configuration data on the randomly chosen visitors to create a model that reflects current market sensitivities concerning the product; (d) determining the optimal price for the product using the model acquired in step (c) by electronic manipulation using a processor; and (e) displaying the optimal price to the Internet merchant. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20)
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Specification