Method and apparatus for automatic pricing in electronic commerce
DC CAFCFirst Claim
1. A method of pricing a product for sale, the method comprising:
- testing each price of a plurality of prices by sending a first set of electronic messages over a network to devices;
wherein said electronic messages include offers of said product;
wherein said offers are to be presented to potential customers of said product to allow said potential customers to purchase said product for the prices included in said offers;
wherein the devices are programmed to communicate offer terms, including the prices contained in the messages received by the devices;
wherein the devices are programmed to receive offers for the product based on the offer terms;
wherein the devices are not configured to fulfill orders by providing the product;
wherein each price of said plurality of prices is used in the offer associated with at least one electronic message in said first set of electronic messages;
gathering, within a machine-readable medium, statistics generated during said testing about how the potential customers responded to the offers, wherein the statistics include number of sales of the product made at each of the plurality of prices;
using a computerized system to read said statistics from said machine-readable medium and to automatically determine, based on said statistics, an estimated outcome of using each of the plurality of prices for the product;
selecting a price at which to sell said product based on the estimated outcome determined by said computerized system; and
sending a second set of electronic messages over the network, wherein the second set of electronic messages include offers, to be presented to potential customers, of said product at said selected price.
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Abstract
An automatic pricing method and apparatus for use in electronic commerce environments is described. Automatic pricing uses live price testing to estimate and measure demand for specific products—taking into account where appropriate, a vendor selected segmentation scheme. The results of live price testing are compared using a vendor selected goal function, e.g. profit maximization, to select a new price. A goal function that balances short term gains versus long term gains based on customer lifetime value is described. The live price testing approach used is designed to minimize losses due to price testing through statistical methods. Additionally, methods for distributing price testing across time so as to avoid problems caused by too many ongoing tests as well as side effects from testing are described. The selected price is a win for both purchasers and vendors as the automatic price will approximate the efficiency of a reverse auction without the inconvenience of the auction format while being goal maximizing for the vendor. For example, a vendor that normally sets prices of items for sale to customers can use embodiments of the invention to great effect.
116 Citations
62 Claims
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1. A method of pricing a product for sale, the method comprising:
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testing each price of a plurality of prices by sending a first set of electronic messages over a network to devices; wherein said electronic messages include offers of said product; wherein said offers are to be presented to potential customers of said product to allow said potential customers to purchase said product for the prices included in said offers; wherein the devices are programmed to communicate offer terms, including the prices contained in the messages received by the devices; wherein the devices are programmed to receive offers for the product based on the offer terms; wherein the devices are not configured to fulfill orders by providing the product; wherein each price of said plurality of prices is used in the offer associated with at least one electronic message in said first set of electronic messages; gathering, within a machine-readable medium, statistics generated during said testing about how the potential customers responded to the offers, wherein the statistics include number of sales of the product made at each of the plurality of prices; using a computerized system to read said statistics from said machine-readable medium and to automatically determine, based on said statistics, an estimated outcome of using each of the plurality of prices for the product; selecting a price at which to sell said product based on the estimated outcome determined by said computerized system; and sending a second set of electronic messages over the network, wherein the second set of electronic messages include offers, to be presented to potential customers, of said product at said selected price. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 53, 54, 55, 56, 57)
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27. A computer-readable medium carrying instructions which, when executed by one or more processors, cause the one or more processors to price a product for sale by performing the steps of:
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testing each price of a plurality of prices by sending a first set of electronic messages over a network to devices; wherein said electronic messages include offers of said product; wherein said offers are to be presented to potential customers of said product to allow said potential customers to purchase said product for the prices included in said offers; wherein the devices are programmed to communicate offer terms, including the prices contained in the messages received by the devices; wherein the devices are programmed to receive orders for the product based on the offer terms; wherein the devices are not configured to fulfill orders by providing the product; wherein each price of said plurality of prices is used in the offer associated with at least one electronic message in said first set of electronic messages; gathering, within a machine-readable medium, statistics generated during said testing about how the potential customers responded to the offers, wherein the statistics include number of sales of the product made at each of the plurality of prices; using a computerized system to read said statistics from said machine-readable medium and to automatically determine, based on said statistics, an estimated outcome of using each of the plurality of prices for the product; selecting a price at which to sell said product based on the estimated outcome determined by said computerized system; and sending a second set of electronic messages over the network, wherein the second set of electronic messages include offers, to be presented to potential customers, of said product at said selected price. - View Dependent Claims (28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 58, 59, 60, 61, 62)
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Specification