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DYNAMIC PRICING SYSTEM WITH GRAPHICAL USER INTERFACE
BACKGROUND OF THE INVENTION
[0001] The present invention generally relates to pricing systems, and more
specifically, but not exclusively, concerns a pricing display system adapted
to display
dynamically priced goods via a graphical user interface.
[0002] One of the first methods for dynamically displaying fluctuating prices
of
publicly traded commodities was the ticker-tape machine. As technology
advanced, these
machines were replaced by electronic displays that simulate a moving ticker-
tape.
Additionally, non-moving displays are known that display fluctuating prices in
real time.
Some examples of electronic displays include the graphics generated by news
networks
during the stock market trading day that reflect the prices of publicly traded
stocks. These
graphics usually siinulate a moving ticker-tape along the bottom of a
television screen.
Another example of such an electronic display is a Light Emitting Diode (LED)
display,
such as those commonly used at the various market exchanges, and in the
lobbies of
brokerage firms.
[0003] Additionally, software is available for use with home and business
computer
systems, as well as hand-held communications and computing devices, that
displays in near
real-time the prices of various publicly traded commodities. For example, many
on-line
brokerage services provide their customers with continuously updated prices
for stock
prices, bond prices, futures prices, and the like. In these situations, the
prices for the traded
items are those agreed to by buyers and sellers who submit "ask" and "bid"
prices.
[0004] In the area of merchandise sales and services for hire, such as
business-to-
business transactions, consumer transactions, and wholesale transactions,
prices are set by
the seller, or negotiated between a buyer and a seller on an individual basis.
This is true for,
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personal property, such as consumer goods, pure intellectual property, such as
on-line
music, movie, software, and book downloads, as well as for services, such as
lawn
maintenance, cleaning services, and the like. For example, the iTunes Music
Store
operated by Apple Computer, Inc., sells downloaded songs for $0.99 each.
[0005] Many merchandise and services items, however, are conducive to having
their
price set by the seller as a function of their demand in the marketplace. This
is especially
true of pure intellectual property goods, such as downloaded songs, movies,
software, and
the like. This is also true of items with a short marketable shelf life, such
as high-
technology items that are in high demand one year and obsolete the next.
[0006] For a purely intellectual property good, the cost to distribute, for
example, a
given sound recording (such as a song) via the Internet, may only be only a
few cents, but
the demand may vary from 10,000 sales per day to 100 sales per quarter. In
another
example, a merchant may be able to demand $250 for video card in January, and
be forced
to "close-out" the same card for $25 in December. It would be desirable to
provide a
system that dynamically adjusts the price of an item available for purchase to
maximize
profit, and display the fluctuating price to prospective purchasers in a near
real-time
fashion.
SUMMARY OF THE INVENTION
[0007] A system for dynamically pricing products available from one or more on-
line
merchants may send a first price for a product from a processor to a customer
device, and
may receive a report of sale for the product at the first price from a
merchant computer.
The system may then determine a second price for the product based at least on
the report
of sale for the product at the first price, and send the second price to the
client customer
device.
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[0008] In a further form, they system dynamically adjusts a plurality of
prices for a
group of on-line merchants. The system may send a set of prices for a product
to a client
computer that has a graphical user interface, and display the prices via the
graphical user
interface. Reports of sale may be sent from merchant computers to the system
indicating
that a product was sold at one or more prices from the set of prices, and the
processor may
determine new prices for the product based at least on the reports of sale.
The new prices
may be sent to the merchant computers and to the client computer. The client
computer
may display the new prices in place of the old prices in the graphical user
interface.
[0009] Other forms, embodiments, objects, features, advantages, benefits, and
aspects
of the present invention shall become apparent from the detailed drawings and
description
contained herein.
BRIEF DESCRIPTION OF THE DRAWINGS
[0010] FIG. 1 is a diagrammatic view of a communication system that includes a
dynamic pricing system.
[0011] FIG. 2 is a diagrammatic view of a first embodiment of the dynamic
pricing
system of FIG. 1.
[0012] FIG. 3 is a first table structure for the dynamic pricing system of
FIG. 1.
[0013] FIG. 4 is a diagrammatic view of a second embodiment of the
communication
system of FIG. 1.
[0014] FIG. 5 is a diagrammatic view of an embodiment of a graphical user
interface
for use with the dynamic pricing system of FIG. 1.
[0015] FIG. 6 is a table structure for the dynamic pricing system of FIG. 1.
[0016] FIG. 7 is a flow diagram illustrating a first process for dynamically
pricing a
product.
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[0017] FIG. 8 is a flow diagram illustrating a second process for dynamically
pricing
a product.
[0018] FIG. 9 is a flow diagram illustrating a third process for dynamically
pricing a
product.
[0019] FIG. 10 is a first data flow diagram for the communication system of
FIG. 1.
[0020]
[0021] FIG. 11 is a second data flow diagram for the communication system of
FIG.
1.
[0022]
[0023] FIG. 12 is a third data flow diagram for the communication system of
FIG. 1.
[0024]
[0025] FIG. 13 is a first data flow diagram showing data flow between the
graphical
user interface of FIG. 5 and the dynamic pricing system of FIG. 1.
[0026] FIG. 14 second data flow diagram showing data flow between the
graphical
user interface of FIG. 5 and the dynamic pricing system of FIG. 1.
DESCRIPTION OF THE PRESENTLY PREFERRED EMBODIMENTS
[0027] For the purposes of promoting an understanding of the principles of the
invention, reference will now be made to the embodiments illustrated in the
drawings and
specific language will be used to describe the same. It will nevertheless be
understood that
no limitation of the scope of the invention is thereby intended, such
alterations and further
modifications in the illustrated device, and such further applications of the
principles of the
invention as illustrated therein being contemplated as would normally occur to
one skilled
in the art to which the invention relates.
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[0028] FIG. 1 depicts a communication system 100 according to one embodiment
of
the present invention in a diagrammatic form. The communication system 100
includes a
dynamic pricing system 102, an administrative computer 104, a network 106, and
one or
more user computers/devices (clients) 108. An administrator of the dynamic
pricing
system manages the dynamic pricing system 102 with the administrative computer
104.
[0029] As illustrated, the administrative computer 104 is operatively coupled
to the
dynamic pricing system 102, and the dynamic pricing system 102 is operatively
coupled to
the other systems through the network 106. As should be appreciated,
administrative
computer 104 can also be operatively coupled to system 102 througll the
network 106.
Although only one administrative computer 104 is shown in FIG. 1, it should be
understood
that system 100 can include multiple administrative computers 104. The
administrative
computer 104 may comprise a wireless terminal, a desktop computer, a server, a
laptop
computer, a personal computer, a coinputer terminal, a personal digital
assistant (PDA), a
pocket PC, a wireless telephone, a PCS communications device, and/or other
types of
devices generally known to those skilled in the art. In one embodiment,
administrative
computer 104 is a personal computer.
[0030] The dynamic pricing system 102 may store, dynamically prices, and
delivers
media content items to the clients 108 over the network 106. The dynamic
pricing system
102 may also be operable to receive media content from the clients 108. This
media
content can include, but is not limited to, music, books, movies, videos,
television shows,
software, coupons, tickets, web pages, magazines, newspapers, and other type
of electronic
media. As should be appreciated from the discussion below, the dynamic pricing
system
102 may also be operable to dynamically price goods and/or services, such as
consumer
products and repair services.
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[0031] For instance, these goods and/or service items can include, but are not
limited
to, compact discs, digital versatile discs, electronic products, household
products, jewelry,
furniture, telephone services, and the like. It should be appreciated that
items, when
purchased, can be delivered electronically over the network 106 and/or
physically
delivered, for example by a postal carrier. As illustrated, the dynamic
pricing system 102
includes a processor 110, a clock 111 and a memory 112. The dynamic pricing
system 102
can be located on a single server or distributed over several servers.
[0032] In one embodiment, the dynamic pricing system 102 is incorporated into
one
or more web servers. The processor 110 is used to control the operation of the
dynamic
pricing system 102. The processor 110 may be comprised of one or more
components. For
a multi- component form of processor 110, one or more components may be
located
remotely relative to the others, or configured as a single unit. Furthermore,
processor 110
can be embodied in a form having more than one processing unit, such as a
multi-processor
configuration, and should be understood to collectively refer to such
configurations as well
as a single-processor-based arrangement. One or more components of the
processor 110
may be of electronic variety defining digital circuitry, analog circuitry, or
both.
[0033] Processor 110 can be of a programmable variety responsive to software
instructions, a hardwired state machine, or a combination of these. The clock
111 is used to
time events in the dynamic pricing system 102. As should be appreciated, the
clock 111
can be incorporated into the processor 110 or can be a stand-alone component.
Further, the
clock 111 can be hardware and/or software based.
[0034] Among its many functions, the memory 112 in conjunction with the
processor
110 is used to store media content and manage sales. Memory 112 can include
one or more
types of solid state memory, magnetic memory, or optical memory, just to name
a few. By
way of non-limiting example, the memory 112 can include solid state electronic
random
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access memory (RAM); sequential access memory (SAM), such as first-in, first-
out (FIFO)
variety or last-in, first-out (LIFO) variety; programmable read only memory
(PROM);
electronically programmable read only memory (EPROM); or electronically
erasable
programmable read only memory (EEPROM); an optical disc memory (such as a DVD
or
CD-ROM); a magnetically encoded hard disc, floppy disc, tape, or cartridge
media; or a
combination of these memory types. In addition, the memory 114 may be
volatile, non-
volatile, or a hybrid combination of volatile and non-volatile varieties. In
the illustrated
embodiment, the memory 112 further includes removable memory 114. The
removable
memory 114 can be in the fonn of a non-volatile electronic memory unit; an
optical
memory disk (such as a DVD or CD ROM); a magnetically encoded hard disk,
floppy disk,
tape, or cartridge media; or a combination of these or other removable memory
types.
[0035] Network 106 may comprise a global network, such as the Internet, one or
more other wide area networks (WAN), a local area network (LAN), wireless
communication networks, a wireless local area network (WLAN), satellite
networks,
Bluetooth networks, a synchronous optical network (SONET), a plain old
telephone service
(POTS) network, voice-over-IP (VoIP) networks, asynchronous transfer method
(ATM)
networks, integrated digital subscriber networks (ISDN), frame relay networks,
proprietary
networks such as provided by America Online, Inc., an institutional network, a
cable
television network, a public switched telephone network (PSTN), or other types
of
communications networks generally known to those skilled in the art. In one
form of the
present invention, the network 106 includes the Internet. In the illustrated
embodiment, the
network 106 further includes an institutional network 115. It should be
appreciated that the
network 106 can include more than one institutional network 115. The
institutional
network 115 is maintained by institutions, such as colleges, universities,
high schools,
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technical schools, other types of learning institutions, and/or charitable
organizations. As
shown, client devices 108 are operatively coupled to the network 106.
[0036] Users access the dynamic pricing system 102 through the client devices
108.
The clients 108 and the dynamic pricing system 102 communicate with one
another by
sending signals across the network 106. In one form, these signals can include
HyperText
Mark-Up Language (HTML) pages, Extensible Mark Up Language (XML) Pages, and
other types transmission protocols. For example, the dynamic pricing system
102 can send
a signal corresponding to a web page form across the network 106 to the client
108. The
user, by utilizing client 108, can fill out the form and send a signal
corresponding to the
filled-out form across the network 106 to the dynamic pricing system 102.
[0037] By way of non-limiting examples, the clients 108 can include personal
computers, both fixed and portable; computer terminals; PDA's; cellular
telephones, land
line based telephones and the like; television systems, such as televisions,
television-based
web browsers, digital video recorders, analog video recorders, cable boxes,
cable modems,
direct broadcast satellite (DBS) boxes, digital versatile disc (DVD) players
and video game
systems; home entertainment systems, such as stereo equipment, MP3 players,
and the like;
sound production equipment; video/movie production equipment; or a combination
these
components, to name a few examples. As shown, the clients 108 are operatively
coupled to
the dynamic pricing system 102 over the network 106. It should be appreciated
that the
clients 108 can be operatively coupled to the dynamic pricing system 102
through
hardwired and/or wireless connections. The clients 108 are hardwired and/or
have software
that allows the clients 108 to communicate over the network 106. In one
embodiment, the
clients 108 are personal computers with software that can include email
applications, web
browsers, chat programs, and/or proprietary software.
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[0038] As shown, the communication system 100 may comprise one or more
merchant computer systems and/or computing devices 116. The merchant computer
116
can include, but is not limited to, any of the devices that were described
above for the
clients 108. The merchant computer 116 may be, in one illustrative embodiment,
a server
computer system, such as a world wide web (Internet) server running Unix,
Linux,
Macintosh OS X Server, Sun Solaris, Microsoft Windows Server, or the like. The
merchant computer 116 may be configured to cooperate with the dynamic pricing
system
102. Alternatively, the merchant computer 116 may be configured merely to
operate as a
web server, in which case the dynamic pricing system 102 may periodically
access the
merchant computer 116 to obtain current pricing information.
[0039] The clients 108 may further include customer devices 124. It should be
understood that customer devices 124 can include, but are limited to, the
devices as
described above for the clients 108. As shown, the customer devices 124 can
further
include institutional member devices 125. Institutional members, such as
students and
teachers, are operatively coupled to the dynamic pricing system 102 through
the
institutional network 115. With customer devices 124, consumers can purchase
and/or
download products from the dynamic pricing system 102. Consumers can view,
listen to
and/or interact with the downloadable products they purchased with customer
devices 124.
For example, when the customer device 124 is a personal computer, the personal
computer
can be used to store compressed digital media musical content, such as MP3
files. The
personal computer then can be used to play, store, and/or "burn" CDs with
music from the
MP3 files.
[0040] In one embodiment, a consumer can download a book with customer device
124 and print out the book with a printer 127 that is operatively coupled to
the customer
device 124. Alternatively or additionally, the consumer can download the
purchased
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content to one or more portable devices 126. These portable devices 126 can
include, but
are not limited to, portable music players (such as MP3 players), PDA's,
cellular
telephones, portable televisions, portable computers, hand held games, e-book
readers
and/or a combination of these devices. As shown, the portable devices 126 can
be
operatively coupled to the customer devices 124 in order to download the
purchased
content. The portable devices 126 can also be operatively coupled to the
network 106
through a wireless network connection.
[0041] For example, a portable music player 128, such as an MP3 player, can
download purchased songs from the customer device 124. It should be understood
that
dynamic pricing system 102 is not limited to a specific file format, such as
the MP3 format
for music. Rather, the dynamic pricing system 102 is able to accommodate a
wide range of
file formats such as WAV and SDMI complaint files for musical works and ASCII
and
portable document format (PDF) files for text, for example. In the illustrated
embodiment,
a consumer with customer device 124 can download a purchased book, software
program,
song, and/or movie to a PDA 130. Moreover, the portable devices 126 can be
operatively
coupled to the network 106 in order to directly purchase and receive content
from the
dynamic pricing system 102. As illustrated, a wireless PDA or cellular
telephone 132 can
purchase and download content directly from the dynamic pricing system 102.
[0042] Payments for content purchased on the dynamic pricing system 102 can be
handled internally and/or handled by a third party system. In one embodiment,
a third party
payment service 136 is used process customer payments for downloaded content.
In one
form, the third party payment system 136 may include the PayFlow system from
Verisign.
In other forms, the third party payment system 136 may include PayPal, Western
Union, a
check truncation system via FedWire, a credit card clearing network, or the
like..
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[0043] Referring now to FIG. 2, a detailed illustration of a first embodiment
of the
dynamic pricing system 102 is illustrated. As shown, system 200 includes the
dynamic
pricing system 102 and one or more clients 108. Although not illustrated in
FIG. 2, the
client computer 108 in the FIG. 2 embodiment is operatively coupled to the
dynamic
pricing system 108 through the network 106 in the same manner as illustrated
in FIG. 1. In
one form, the network 106 for the FIG. 2 dynamic pricing system 102 includes
the Internet.
[0044] The dynamic pricing system 102 in the FIG. 2 embodiment includes one or
more connection servers 202, one or more navigation servers 204, one or more
heartbeat
(load balancing) servers 206, one or more database servers 208, one or more
file servers
210, one or more master database servers 212, and one or more master file
servers 214.
Although servers 202, 204, 206, 208, 210, 212 and 214 are illustrated as
separate units, it
should be understood that selected servers or all of the servers can be
combined to form a
single unit. In one form, the dynamic pricing system 102 utilizes the Linux
operating
system with programs coded in the JAVA language. As should be appreciated, the
dynamic pricing system can use other operating systems, such as UNIX,
Microsoft
Windows, or the Apple Macintosh operating system, to name a few. Further, the
software
in the dynamic pricing system 102 can be programined in other languages
besides JAVA,
such as C++, Visual Basic, Fortran, Pascal, CGI or PERL, to name a few.
[0045] As illustrated, the heartbeat server 206 is operatively coupled to the
connection server 202, the navigation servers 204, the database servers 208,
and the file
servers 210 in order to monitor their load. The connection seiver 202 is
operatively
coupled to the navigation servers 204. The navigation servers 204, the
database servers 208
and file servers 210 are operatively coupled to one another. The heartbeat
server 206
monitors the performance of the other servers and load balances the dynamic
pricing
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system 102. Periodically, servers 202, 204, 208 and 210 individually send
their load status
information to the heartbeat server 206.
[0046] With the collected status information, the heartbeat server 206 is able
to load
balance servers 202, 204, 208 and 210. If the heartbeat server 206 does not
receive a status
signal from one of the servers 202, 204, 208 or 210, the heartbeat server 206
concludes that
the server is offline, or otherwise unavailable, and directs the requests to
the remaining
servers. For example, when one of the database servers 208 goes offline, the
heartbeat
server 206 can route requests to the remaining database servers 208. Each
server receives
load information about the other servers from the heartbeat server 206. Based
on this load
information, a server can send processing requests to a server with a lower
load in order to
improve the operational efficiency of the dynamic pricing system 102.
[0047] The connection server 202 is operatively coupled to the clients 108
over the
network 106. The connection server 202 receives and processes all requests
from the
clients 108. When a request is received, the connection server 202 queries the
heartbeat
server 206 to find an available navigation server 204. The connection server
202 then
forwards the request to the selected navigation server 204. Based on the
request and the
load information from the heartbeat server 206, the navigation server 204
determines the
appropriate database server 208 and/or file server 210 to contact in order to
process the
request.
[0048] The file servers 210 store the media content that is for sale on the
dynamic
pricing system 102. As illustrated, the file servers 210 can maintain
different media types
on separate servers. For example, the file servers 210 can include one or more
movie
servers 216, one or more book/text servers 218, one or more music servers 220,
one or
more software servers 222, and one or more photograph/picture servers 224.
However, it
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should be understood that the different media types can be stored on a single
server or
combined on an array of servers.
[0049] In the FIG. 2 embodiment, movies, videos, shows, and the like are store
on
movie servers 216. As shown in the illustrated embodiment, there are three
movie servers,
first 216a, second 216b and 216c third movie servers. Books, poems, short
stories,
manuals, news articles and other types of text are stored on the books server
218. The
music servers 220 store music, songs, lyrics, sound recordings and the like.
In the
illustrated embodiment, the music servers 220 include a first music server
220a and a
second music server 220b. Software and pictures are respectively stored in the
software
server 222 and the photograph server 224. The master file server 214 maintains
masters of
the files stored on the file servers 210 and periodically updates the files
stored on the file
servers 210. In one form, so as to minimize the risk of corruption, the master
file server
214 is offline with respect to the file server 210 and only connects to the
file servers 210
when updating the files on the file servers 210.
[0050] Depending on popularity, multiple copies of the same work (file) can be
stored
on multiple file servers 210. Initially, a file containing the work (content)
is loaded onto
one of the files servers 210, which becomes the "home" file server 210 for the
work. For
example, during initialization of the dynamic pricing system 102, a song is
loaded from the
master file server 214 onto the second music server 220b, which becomes the
"home"
music server 220 for this particular song. As the song becomes popular, the
second music
server 220b can place a copy of the file containing the song onto the first
music server 220a
so as to optimize performance of the dynamic pricing system 102. All requests
for the song
are initially placed with the "home" music server 220, which is the second
music server
220b in this example, and if the second, home music server 220b is unable to
process a
request for the song, the second music server 220b redirects the request to
one of the other
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music servers 220 that has a copy of the song, which in this case is the first
music server
220a. Since all requests for downloading of a content file are first placed
with the home
file server 210, the home file server 210 is able to track and record the
number of times the
particular content file has been purchased and downloaded. The home file
server 210 also
perform keeping functions by removing copies of less popular works from the
other file
servers 210 in order to conserve space in memory 112.
[0051] Using the same example, once the song becomes less popular, the second,
home music server 220b can delete the copy of the song from the first music
server 220a.
In one embodiment, different works can have different home file servers 210.
Returning to
the same example, while the second music file server 220b was the home file
server 210 for
the first song, the first music file server 220a can be the home file server
210 for a second,
different song. In another embodiment, all of the works for a particular type
of work
(music, books, movies, etc.) can have one file server 210 designated as the
home file server
210. For example, in this embodiment, all of the songs loaded into the dynamic
pricing
system 102 can have the first music file server 220a as their "home" file
sever 210.
[0052] The database servers 208 store information about the content stored on
the file
servers 210 and information about users of the dynamic pricing system 102.
This
information is stored in one or more databases 225 on the database servers
208, and this
information can include, but is not limited to, the name/address of the "home"
file server
210 for the works; the names of the artists, authors, directors, actors and/or
owners of the
works; titles; publishers; producers; type of work, such as music, text or
video; work
category; subject; pricing information and size/length of the work. The
databases 225 on
the database servers 208 can be a standard file, a combination of files, a
standard database
program, a relational database, a SQL (Structured Query Language) database,
and/or other
types of data storage structures as generally known by those skilled in the
art. In one
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embodiment, the databases 225 on the database servers 208 are PostGreSQL
databases. As
should be appreciated, the databases 225 on the database servers 208 can be
other types of
database, such as an Oracle or Microsoft SQL Server type databases.
[0053] In the illustrated embodiment, the database servers 208 have multiple
databases 225 organized by content type. For example, the databases 225 can
include one
or more movie databases 226; one or more book/text databases 228; one or more
music
databases 230; one or more software databases 232; one or more
photograph/picture
databases 234; one or more user databases 236; and/or one or more artist
information
databases 238. The databases 225 can be active as separate database instances
on a single
database server 208 or on separate database servers 208. In the illustrated
embodiment, the
databases 225 are maintained on separate database servers 208. To improve
perfomiance,
the database servers 208 in one embodiment contain multiple, redundant copies
of the same
database 225.
[0054] In the illustrated embodiment, the database servers 208 in FIG. 2 have
three
movie databases 226 stored on separate database servers 208 that contain the
same
information. The movies databases 226 contain information about the movies,
videos
and/or shows stored in the movie file servers 216. For instance, the movies
databases 226
can store the file name along with the name/address of the home movie file
server 216; file
size; title; writer; director; actors; producers; writers; distributors; movie
category, such as
drama or action; description; comments; reviews; pricing and demand
information; and/or
length of the work. The books databases 228 maintain information about the
text stored in
the books file servers 218.
[0055] For example, the books databases 228 can store the file name along with
the
home book file server 218 for a work; file size; the title; author; owner;
publisher;
distributor; picture of the author and/or book cover; category, such as
biography or
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mystery; description; comments; reviews; pricing and demand information;
and/or size of
the work. Similarly, the music databases 230 can store the file name of a
song, the location
of the file on the home music server 220, song title, artist, author,
producer, distributor
(label), album name, album picture, picture of the artist, musical category,
description,
comments, pricing information, demand information, and/or length/size of the
song along
with other information relating to the song. The software databases 232 and
the picture
databases 234 respectively store information about the software stored on the
software file
servers 222 and the pictures stored on the picture file servers 224, and this
infonnation can
include file name and home file server information 210; pricing and demand
information;
titles; size; category; owner and/or authorship.
[0056] Information about the particular users of the dynamic pricing system
102 is
maintained in the users databases 236. The information in the users databases
236 can be
used control access to the dynamic pricing system 102 and maintain billing
information.
Examples of such information include the usemame and password; first and last
names;
home and business addresses; email addresses; telephone numbers; session
identifiers
(ID's) and other session information; and billing and account balance
information, to name
a few. Biographical and other types of artist information is maintained one
the artists
databases 23 S. It should be understood that the above-described databases 225
can include
additional information and/or omit certain information.
[0057] The master database server 212 maintains masters of the databases 225
stored
on the database servers 208 and periodically updates the databases 225 stored
on the
database servers 208. In one form, so as to minimize the risk of corruption,
the master
database server 212 is offline with respect to the database servers 208 and
only periodically
connects to the database servers 208 when updating the databases 225.
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[0058] All requests, such as a web page requests, from the client 108 (as
indicated by
arrow 250 in FIG. 2) are routed to the connection server 202. Based on load
information
from the heartbeat server 206, the coiinection server 202 routes the request,
as indicated by
arrows 252 and 254, to the navigation server 204 with the lowest load. In one
embodiment,
for each subsequent action by the user, the heartbeat server 206 remembers
which server
was previously used and routes the user to the same server. The navigation
server 204
processes the requests. For instance, the navigation server 204 can query one
of the
databases 225, as shown by arrow 256, in order to process the request. The
navigation
server 204 selects the particular database server 208 based on the infonnation
required (i.e.
information about music, books etc.) and the load information from the
heartbeat server
206. As depicted by arrow 258, the results from the queiy are retuzned to the
navigation
server 204 that sent the query. Based on the results, the navigation server
204 generates a
web page and sends the page to the client 108, which is depicted by arrow 260.
In another
example, the navigation server 204 processes a purchase/download request from
the client
by sending the requested file name to the home file server 210 for the
particular file, which
is indicated by arrow 262. As depicted by arrow 264, the file server 210
transfers the file to
the client 108.
[0059] FIG. 3 illustrates one embodiment of a table structure 300 of database
tables
302 in the databases 225. As should be appreciated, the databases 225 can have
different
tables 302 and/or table structures 300 than the one shown. The tables 302 in
the databases
225 include a media information table 304, a pricing table 306, a keyword
table 308, an
artist table 310, an account table 312, and a session table 314. The media
information table
304 stores information about the media content stored on the file servers 210.
In one
embodiment, the movie 226, books 228, music 230, software 232, and photograph
234
databases each include one or more media information 304, pricing 306 and
keyword 308
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tables. The media information tables 304 include a number of fields 316 that
contain
information about a particular media content item.
[0060] As shown, the fields 316 in the media information table 304 can include
a
media ID field 318 for storing a unique identifier for an item; a media name
field 320,
which for example stores the name of the movie, song, program, etc.; an
artist/author name
field 322 in which the name of the artist is identified; and an artist ID
field 324 which
contains a unique identifier for individual artists on the dynamic pricing
system 102. In
FIG. 3, asterisked ("*") fields in the tables 302 are the fields by which the
individual tables
302 are indexed. For instance, the media information table 304 is indexed by
the media ID
field 318. Categorical information, such as the album name and/or the type of
music, can
be stored in field 326. The filename, path and/or Internet Protocol (IP)
address for an
image related to the particular content is stored in field 328. For example,
field 328 can
contain the path and the file name of an image of a book or an album cover.
[0061] The physical length of the item, such as the number of pages or playing
time,
is stored in field 330, and the file size of the item is stored in field 332.
The file name and
address, such as the path and/or IP address of the home file server 210, of
the item is listed
in field 334. The price model for dynamically pricing the item, the initial
price for the item,
and the implicit or marginal cost of the item are stored in fields 336, 338
and 340,
respectively. Fields 342, 344 and 346 respectively store the minimum price for
the item,
the maximum price for the item and the current price for the item.
[0062] The current demand, or the number of times the item was purchased
within a
specified period, is maintained in field 348. A count cache field 350 stores
the number of
purchases of the item since the last time the current demand was determined.
Pricing
algorithm parameters field 352 can store information such as the historical
pricing and
quantity ordered information for the item. In one form, field 352 stores the
price and
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corresponding demand for the item over the last seven periods. It should be
appreciated
that depending on the dynamic pricing technique used, field 352 can store
other parameters,
such as the time between purchases.
[0063] The pricing table 306 stores information related to the price of
particular
media content items. The pricing table 306 includes media ID field 318 for
identifying the
particular item. The date/time, the price at that time, and the quantity
demand at that time
for the item identified by the media ID field 318 are stored in fields 354,
356 and 358,
respectively. The keyword table 308 is used for searching and locating records
of items in
the databases 225 by keywords. In keyword table 308, the keywords are stored
in field 360
and the media ID of the record that contains the keywords is stored in the
media ID field
318.
[0064] The artist table 310 is maintained in the artist database 238 and
contains
information about artists, authors, performers, directors, producers, and the
like. The artist
ID field 324 is a unique identifier for the artist. The usemame and artist
name are
respectively stored in fields 362 and 322 in table 310. A description of the
artist and their
work is maintained in field 364. The address to the web site for the artist is
stored in field
366.
[0065] As illustrated in FIG. 3, account information for the users of the
dynamic
pricing system 102 is maintained in account table 312. In one form, the
account
information table 312 is maintained in each user database 236. It should be
appreciated that
the user information in table 312 can be encrypted in order to ensure privacy.
In table 312,
the usemame and password for accessing the dynamic pricing system are
maintained in
fields 362 and 368, respectively. As shown, the first name and last name of
the user is
stored in fields 370 and 372, respectively. The street address of the user is
stored in fields
374 and 376. The city, state, zip code, country, email address, and telephone
number of the
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user are stored in fields 378, 380, 382, 384, 386 and 388, respectively. The
account balance
of the user is maintained in field 390.
[0066] Information about user access to the dynamic pricing system 102 is
maintained in the session table 314. In one form of the present invention, the
session table
314 is stored in the user database 236. As should be appreciated, the session
table 314 can
be stored in other databases 225. The session table 314 stores a unique
session ID in field
392 and the username in field 362. The date/time of the session is maintained
in field 394.
The tables 302 are linked to one another by various fields 316. For instance,
the pricing
306 and keyword 308 tables can be linked to the media information table 304
via the media
ID field 318. The session 314 and account 312 tables are linked to one another
by the
usemame field 362. The artist table 310 can be linked to table 304 via the
artist ID field,
and the artist table 310 can be linked to the account table via the username
field 362.
[0067] FIG. 4 depicts a second embodiment of communication system 100 drawn in
a
simplified block schematic form. As in FIG. 1, the communication system 100
includes
the dynamic pricing system 102, the network 106, the client 108 the customer
device 124,
the client 108, and the merchant computers 116. In the illustrative embodiment
shown in
FIG. 4, the merchant computers 116 may include web server and database server
functionality, and an illustrative merchant computer 11 6a is shown for a
merchant A, an
illustrative merchant computer 11 6b is shown for a merchant B, etc., to
illustrate that any
number of merchant computers 116 may communicate with the dynamic pricing
system
102. The merchant computers 116 are shown coupled directly to the dynamic
pricing
system 102 for simplicity; in implementation the merchant computers 116 may
communicate with the dynamic pricing system 102 via the network 106, as
illustrated in
FIG. 1.
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[0068] In the illustrative embodiment illustrated in FIGS. 1-3, the dynamic
pricing
system 102 stores, dynamically prices, and delivers media content items to the
customer
device 124. As shown in the embodiment illustrated in FIG. 4, however, the
dynamic
pricing system 102 is also operable to dynamically price media content from
the one or
more merchant computers 116. This media content can include, but is not
limited to,
music, books, movies, videos, television shows, software, coupons, tickets,
web pages,
magazines, newspapers, and other type of electronic media. Furthermore, the
dynamic
pricing system 102 is also operable to dynamically price goods and/or
services. For
instance, these goods and/or service items can include, but are not limited
to, coinpact
discs, digital versatile discs, electronic products, household products,
jewelry, furniture,
telephone services, repair services, cleaning services, and the like. It
should be appreciated
that such goods, when purchased, would be delivered electronically over the
network
and/or physically delivered, for example by a postal carrier. Services would
be rendered at
any suitable location. For example, cleaning services would be likely be
rendered at the
consumer's location.
[0069] As shown in the embodiment illustrated in FIG. 4, the dynamic pricing
system
102 may centralize the merchants who operate the merchant computers 116 to
form a sort
of "superstore" wherein a customer may utilize the customer device 124 to shop
for a
variety of products and quickly determine costs in near real time. The
customer device 124
may execute a graphical user interface 500 to provide this functionality.
[0070] Turning to FIG. 5, one illustrative embodiment of the graphical user
interface
500 is shown. The graphical user interface 500 may be an executable client
application,
such as a Java application, a Windows application, an Apple Macintosh
application, a
mobile device application such as a Palm OS application, or the like. In one
embodiment,
the graphical user interface 500 is a widget comprising HTML code, JavaScript,
and
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Cascading Style Sheets (CSS), such as a widget created for use with
Konfabulator or
Macintosh OS X Dashboard. The graphical user interface 500 could also be a web
page, or
the like.
[0071) The graphical user interface 500 may include a search bar 510, a ticker
window 520, and a convenience display 530. The convenience display 530 may be
used
for advertising, weather updates, or other types of information that may be of
interest to the
user of the customer device 124. The search tab 518 allows the user to perform
a search for
a particular product, and obtain pricing and other information for that
product. When the
user of the graphical user interface 500 inputs a search in the search tab
518, a new search
tab 518 appears, and the old search tab 518 is replaced by a product tab, for
example, a
product tab 512.
[0072] Clicking on the "X" button in the upper right corner of one of the
product tabs
512-516 will close that particular tab. Each one of the product tabs 512-516
represents the
results of one search initiated via the search tab 518. When a product tab is
selected,
pricing and other information for that product is displayed in the ticker
window 520. In the
example shown in FIG. 5, the product tab 514 is selected, which corresponds to
a
"Robosapian" toy, and pricing information is displayed in the ticker window
520 for the
selected product for each of the merchant computers 116 that is operated by a
merchant
which carries the product. As shown by a product listing 522, Merchant A,
which operates
the merchant computer 116a, is currently offering the product for $89.99. The
product
listing 522 shows a"+1.00" after the current price to indicate that this is an
increase of
$1.00 over a previous price. Similarly, a product listing 524 indicates that
the merchant
computer 116b is currently offering the product for $95.97, which is a
decrease of $2.00
from a previous price.
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[0073] A product listing 526 indicates that the merchant computer 1 16c is
currently
offering the product for $78.99, which is currently the lowest price. The
graphical user
interface 500 may indicate that the product listing 526 is the lowest price
for the product
by, for example, changing the color of the text, bolding the text, inverting
the text, flashing
the text, or the like. The product listing 528 is shown scrolling into the
ticker window 520.
In one embodiment of the ticker window 520, the product listings 522-528
scroll from one
side to the other. In other embodiments, however, the product listings 522-528
may fade in
and out as a group, scroll from top to bottom (or vice versa), or remain
static.
[0074] To obtain the information displayed in the product listings 522-528,
the
operator of the dynamic pricing system 102 may enter into contracts with the
merchants
who operate the merchant computers 116. The dynainic pricing system 102 may
copy data
from the merchant computers 116 into an algorithm and product information
database 227
as shown in FIG. 4, which may be one of the databases 225 shown in FIG. 2.
Where the
goods for sale are media, the product information database 227 may include the
table
structure 300 of database tables 302, as described above. Where the goods or
services for
sale are not conducive to electronic disbursement, the product information
database 227
may include a table structure 600, as described below.
[0075] Turing to FIG. 6, the table structure 600 is shown. It should be
appreciated
that the information in table structure 600 can be encrypted in order to
ensure privacy. A
table structure 602 of database tables 601 is shown in the table structure
600. As should be
appreciated, the table structure 600 can have different tables 601 and/or
table structures 602
other than the ones shown. The tables 601 in the databases 600 include a
product
information table 604 and a pricing table 606. The product information table
604 stores
information about the products available from the merchants who operate the
merchant
computers 116. The product information table 604 includes a number of fields
616 that
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contain information about a particular product. The term "table" as used
herein refers to a
table of a relational database. It will be appreciated, however, that a record
from a non-
relational database could be used to provide the same functionality.
Therefore, the term
"table" should be understood to also refer to records, and vice versa.
[0076] As shown, the fields 616 in the product inform.ation table 604 can
include a
product ID field 618 for storing a unique identifier for a product; a product
name field 620,
which for example stores the name a product; a product supplier field 622 in
which the
name of the supplier of the product to the store is identified; and a product
supplier ID field
624 which contains a unique identifier for individual product suppliers. In
FIG. 6,
asterisked ("*") fields in the tables 601 are the fields by which the
individual tables 601 are
indexed. For instance, the product information table 604 is indexed by the
product ID field
618.
[0077] The shelf location for a product, for example the location of the
product in a
fulfillment warehouse, is stored in field 628. The price model for dynamically
pricing the
product, the initial price for the product, and the cost or marginal cost of
the product are
stored in fields 636, 638 and 640, respectively. Fields 642, 644 and 646
respectively store
the minimum price for the product, the maximum price for the product and the
current price
for the product. The current demand, or the number of times the product was
purchased
within a specified period, is maintained in field 648. Pricing algorithm
parameters field
652 can store information such as the historical pricing and quantity ordered
information
for the product. In one form, field 652 stores the price and corresponding
demand for the
product over the last seven periods. It should be appreciated that depending
on the dynamic
pricing technique used, field 652 can store other parameters, such as the time
between
purchases.
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[0078] The pricing table 606 stores information related to the price of
particular
products. The pricing table 606 includes product ID field 618 for identifying
the particular
product. The date/time, the price at that time, and the quantity demand at
that time for the
product identified by the product ID field 618 are stored in fields 654, 656
and 658,
respectively.
[0079] Below a number of techniques for dynamically pricing products on the
dynamic pricing system 102 will be described. The dynamic pricing system 102
strives to
optimize profit; this typically involves some estimation of the demand
curve(s) for the
products. The dynamic pricing system 102 in dynamically pricing the products
actually
never "knows" the demand curve for a product. Generally, the dynamic pricing
system 102
continues to raise the price for a product until total profits are reduced.
Alternatively,
system 102 will decrease the price of a product whenever an increase in price
reduces
profits. A general description of one embodiment of the pricing algorithm will
now be
described below. In this embodiment, the dynamic pricing system 102 through
processor
110 calculates price adjustments using a logarithmic demand curve that has
been found in
empirical econometric studies to be the best fitting of algebraically
tractable functional
form for many retail markets. The quantity of a particular product (q)
purchased at a
particular price (p) is assumed to take the form of Equation 1 below:
Log[qJ = a - flp (Equation 1)
where
Log[ ] is a natural logarithm
q= quantity of a product
p= Price of the product
a, (3= parameters.
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[0080] With Equation 1 above, parameters a and 0 are unknown. In order to
solve
these parameters, the technique according to the present invention uses data
observed
through sales of products to estimate these parameters. Another factor in
determining the
optimal price for a product is that the demand curve for a product will change
over time.
Therefore, in one embodiment, the dynamic pricing system 102 does not base its
price upon
very old data. Still yet another obstacle the dynamic pricing system 102 faces
in
determining pricing for a particular product is that customer demand at the
time periods in
which a particular product is demanded varies depending on the nature of a
particular
product. The profit (profitt) made in a particular time period (T) is
described below in
Equation 2:
profitt = qt(Pt - c) (Equation 2)
where
t = time period
profitt = profit for a particular product at time period t
qt = quantity of products sold time period t
Pt = price of the product at time period t.
c = marginal cost.
[00811 It should be noted that for this embodiment the fixed costs are ignored
in
Equation 2. Equation 2 only considers the marginal cost (c) caused by changes
in sales
volumes for a particular product. However, it should be understood that in
other
embodiments fixed costs can be a factor for dynamically pricing a product.
Other factors
may be incorporated into Equation 2 in order to determine the optimal profit.
For example,
if the time period (t) was twelve-hours (12 hours), one would expect that more
sales would
occur during the day as opposed during the middle of the night. This situation
could result
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in undesirable, dramatic price fluctuations. To compensate for the difference
between the
periods, Equation 2 can factor in one or more additional variables in order to
stabilize
prices. Alternatively or additionally, the length of the time periods can vary
in order to
compensate for the differences between the periods. In another form, the price
fluctuations
between day and night are left alone so that shoppers are given an incentive
to shop at night
when sales are typically lower.
[0082] With the above background, an example will now be used to describe how
prices are dynamically adjusted according to one embodiment of the present
invention. In
an initial time period (t=1), an initial price for a product is set. For
example, the initial
price of a product could be set to 900 ($0.90), depending on what the merchant
who operate
the merchant computer 116 believes is appropriate. In this particular example,
P1 = $0.90.
In the second time period (t=2), the processor 110 of the dynamic pricing
system 102
changes the price in order to get a sample of the change in consumer demand at
a differing
price levels. In the current example, the price of a particular product is
raised by 10%,
which is shown in equation 3 below.
pZ = p1 + 0.10 pI (or p2 = pl x 1.10) (Equation 3)
where p2 = price in the second time period.
[0083] Flow diagram 700 in FIG. 7 illustrates this technique according to one
embodiment of the present invention. The technique described below should be
understood
as applicable to any type of product on the dynamic pricing system 102. In
stage 702, the
initial price (pl) of a product for sale is set by the dynamic pricing system
102 and
displayed via product pricing units 240. One or more reports of sales of the
product are
received by the dynamic pricing system 102 in stage 704, and the dynamic
pricing system
102 stores in memory 112 the price (pi) and quantity sold (ql) for the first
time period. The
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length of the time periods in this embodiment can for example be by second, by
minute,
hourly, daily, weekly, monthly, yearly, or some other time increment (e.g..,
every 33.5
seconds). In one form, the time interval for each period is one day. For
instance, the first
time period would be day 1, the second time period would be day 2, and the
third time
period would be day 3. After the first time period, the processor 110 of the
dynamic
pricing system 102 in stage 706 sets a second price (P2) for the product and
supplies the
second price (p2) for the product to product pricing units 240 (see, Equation
3). The
processor 110 in stage 706 can either increase or decrease the price of the
product.
[0084] For explanation purposes, we will assume that the dynamic pricing
system 102
increased the price in stage 706. In stage 708, the dynamic pricing system 102
receives
reports of a quantity of sales (qz) for the product from the merchant
computers 116. In time
period three (t=3), the price and quantity sold information from the previous
two periods is
used to determine whether the price change from the first period to the second
period
increased profits or not. If profits increased (q2 (p2 - c) > ql (pi - c))
then increasing prices
further may be profitable. If profit decreases, however, then a price decrease
from initial
price (pl) may be appropriate. The changes in prices depend on the functional
form of the
particular demand curve for the particular product for sale. Using a
logarithmic demand
curve, Equation 4, which is shown below, can be used to calculate profit.
profit = q (p-c) - Exp(a - flp) (p-c) (Equation 4)
[00851 From Equation 4, the profit maximizing price can be determined to be as
shown below in Equation 5.
p = (1 +~c) (Equation 5)
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[0086] A nice property of Equation 5 is that price is not dependent upon
unknown
parameter a. However, the optimal price still depends on unknown parameter ~3.
As should
be appreciated, a number of techniques can be used to estimate the parameters
(I. In one
technique, the two observations of price (p) and quantity (q) are combined
from periods one
and two to generate an estimate of P. Equations 6 and 7 illustrate this
technique.
Log[qIJ = a - /3 pl+al (Equation 6)
Log[q2j = a - /3 p2+82 (Equation 7)
Where El and s2 = sampling error.
[0087] Equations 6 and 7 can be combined in order to determine parameter 0,
which
is shown below in Equation 8.
Y= 2LOg[q2I - Log[q1I - E2 - EIj1(Y1 -p2) (Equation 8)
[0088] It is assumed that the longer interval time between price changes, the
smaller
expected sampling error (sl, s2) would be relative to the quantities sold.
Over a long period
of time, the expected sampling error terms would be zero. This yields Equation
9 below.
{Log[qZ ] - Log[q, ] } (Equation 9)
(Pl -P2)
[0089] The profit maximizing, or optimal price, can be determined by combining
Equation 5 with Equation 9, which yields Equation 10 below.
(1 + c)(Pr-a - Pr,)
p'_,,op~ _ (Equation 10)
{Log[R'r-i ~ - Log[qr-2
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Where pt-I,opt = optimal price for time period t-1
[0090] In order to prevent extreme fluctuations in pricing between two
periods, the
change in pricing between two different periods is dampened so that wild
fluctuations in
pricing do not occur. The amount of dampening can be adjusted depending on the
amount
of aggressiveness in pricing the administrator intends to use. The estimation
of P is highly
subject to sampling error. Therefore, to be conservative, a geometric mean
between the
previous price and the new estimated optimal price may be taken. In addition,
absolute
bounds on how much a price adjustment between two periods may further be set
to further
dampen pricing. This is done just in case the estimation procedure gives an
inaccurate
estimate. A generic form of this teclmique used by the dynamic pricing system
102 is
shown in Equation Set 11 below.
Set
pt = pK-1-L i.fPt-].opt ~ P:-l-L
Pt =(Pr-X(Pt-i.opd(' w) ifPc-1- L:5, Pc-I,opc 5 pt-I +L (Equation Set 11)
pt = pt-I +L if pt-I,opt > pt-1+ L
Where
L = limit bounds
W = weighting factor.
[0091] Limit bounds (L) in Equation Set 11 is used to limit how much the price
will
be adjusted between two periods. For example, if the optimal price for the
previous time
period is greater than the limit bounds (L) from the actual price, then the
dynamic pricing
system 102 sets the price for the current time period (pt) to the limit bound
(L) from the
previous time period price (p,I). Weighting factor (W) is used as a geometric
mean of
weighting the different prices between the optimal and the actual pricing. For
example, the
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weighting factor is used when the optimal price for the previous time period
(pt_,, pt) is
within the limit bounds (L). The geometric mean of the weighting factor (W)
allows the
price to move in the direction of the estimated optimal price (pt_I,o,), but
forces the price to
move slowly. Aggressiveness in price adjustments can be adjusted by adjusting
the
weighting factor W. The more comfortable the administrator is with the pricing
estimates,
the more aggressive the pricing can become by adjusting weighting factor W.
[0092] For example, at time period one, the dynamic pricing system 102 priced
the
product at $1.00 (pi = $1.00) and the number of the products that were
purchased during
time period one was 150 (q1= 150). During time period two, the dynamic pricing
system
102 priced the same product at $1.40 (p2 = $1.40) and the number products that
were
purchased during time period two was 100 (q2 = 100). In time period three, the
dynamic
pricing system 102 determines the optimal price to be the following in
Equation 12 (stage
710). In Equation 12, we have assumed the marginal cost of supplying an
additional
product to be ten cents (c =0.1) for this example.
(l+c)(Pi -Pz)
Pz, pt - {Log[qz ] - Log[q, ] }
(Equation 12)
(1 + 0.1)(1.00 -1.40) = 1.09
p z' p' - {Log[100] - Log[150] }
[0093] With the bounds equals $0.50 (L) and weighting factor W=0.8 in this
example,
the dynamic pricing system 102 uses Equation Set 13 below in order to
determine the
dynamic price at time period three (p3).
Set
P3 = P2 - 0.50 if pZ,op<<p2 -0. 50
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pj = (pz) '8(pzõopt)0'2 ifla2-0.50 ~~,opt~~+0.50 (Equation Set 13)
P3 = P2 + 0.50 lf p2,opt >p2 +0.50
p3 = (1.40)0.8(1.09)0.2 = $1.33
[0094] In stage 710, the dynamic pricing system 102 with processor 110 sets
the
revised sale price for the product and stores the price in memory 110. Using
the above
example, the dynamic pricing system 102 would then set the price of the
product to $1.33
in time period three. For subsequent time periods, as sales reports are
received in stage
708, the dynamic pricing system 102 continues to periodically re-price the
product
according to the Equation Set 11.
[0095] Equation 14 below is a generic form for another technique of
dynamically
pricing a product according another embodiment of the present invention.
New Dynanaie price = Price Basis x Dvnamic Price Modifi.er (Equation 14)
[0096] In Equation 14, the price basis is modified by the dynamic price
modifier so as
to result in a new dynamic price for a product. In one form, the dynamic price
modifier is
some measure of change in demand for one or more products being priced. In
another
form, the dynamic price modifier can take into account profitability of
different price
levels. It should be understood that the dynamic pricing modifier can take
into account
other factors. These factors can include, but are not limited to: the marginal
and/or fixed
costs of the product; price ceilings and/or floors for the product; the
popularity of the
product as measured by third parties; and reviews of a product.
[0097] Generally, the dynamic price modifier increases the price of a product
when
demand for that product increases and reduces the price of a product when the
demand for
the product decreases. In one form, the dynamic pricing modifier is based on
the
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differences between the quantities sold at specific intervals. For instance,
these intervals
can be by second, by minute, hourly, daily, monthly, or yearly. In another
form, the
dynamic pricing modifier is based on the time between successive purchases.
For example,
if the time delay between successive purchases decreases, the dynamic pricing
system 102
can infer that demand is increasing and thus increase the price for the
product.
[00981 FIG. 8 is a flow diagram 800 that illustrates a technique for
dynamically
pricing products according to another embodiment of the present invention. In
the
technique illustrated in FIG. 8, the price of a product is changed based on
the time delay
between sales of the product. An initial price for the product on the dynamic
pricing
system 102 is set in stage 802. The system administrator can set the initial
price for the
product. Alternatively or additionally, the dynamic pricing system 102 in this
and other
embodiments can automatically set the initial price based on default prices
and/or historical
prices for similar products stored in memory 112. In one form, the
administrator through
the administrative computer 104 sets the initial price for a product on the
dynamic pricing
system 102. In stage 804, the processor 110 of the dynamic pricing system 102
receives a
sales report from the merchant computers 116 over the network 106. From the
clock 111,
the processor 110 in stage 806 stores in memory 112 the time the order was
received.
100991 In stage 808, the processor 110 determines the time period (t) between
the
current purchase and the previous purchase of the product. In another form,
the clock 111
is reset after each purchase such that the processor 110 stores in memory 112
the time
period (t) between the current and previous purchases. Initially, at the first
purchase of the
product, the time period (t) between purchases can be based on the time delay
between
when the product was originally available on the dynamic pricing system 102
and when the
first purchase was made. The time when the product was first available on the
dynamic
pricing system 102 can be stored into memory 112 in stage 802. In another
fornl, the
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processor 110 waits to receive a second order from a customer before
calculating the time
delay (t) between purchases. It should be appreciated that the dynamic pricing
system 102
can record a series of purchase times before dynamically pricing a product.
[00100] In stage 810, the processor 110 determines the average time delay
((AVE(t))
between purchases. In one form, the average time delay is calculated for all
purchases, and
in another form, the average time delay is calculated for a set number (N) of
previous
purchases so as to take into account shifts in the demand curve. In one
particular form, the
average time delay is calculated for the last 10 periods (N = 10). Equation 15
below
illustrates how the average time delay is calculated.
AVE(t) = t; + ti-, N+ ti-N+, (Equation 15)
Where
AVE(t) = Average Time Delay Between Purchases
t; = Time delay Purchase Period i
N = Number of Periods
[00101] Generally, when the current time delay is less than the average time
delay, it
can be inferred that demand for the product has increased. Conversely, if the
current time
delay is greater, then it can be inferred that demand has lowered. In stage
812, the
processor 110 of the dynamic pricing system 102 determines whether or not the
current
time delay between purchases (t) is less than average time delay between
purchases
(AVE(t)). If the current time delay is less than the average, the processor
110 increases the
price of the product in stage 814. In one form of the present invention, the
price would be
adjusted according to Equation 16 as illustrated below. As can be seen below,
Equation 16
is derived from Equation 14.
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P,.+I = P x A VE(t) (Equation 16)
t;
Where
P;+1= New Dynamic Price
P; = Price Basis, or Current Price for Period i.
[00102] In Equation 16, the price basis is the price of the product for the
latest period,
and the dynamic price is the new price for the product. For example, if the
price of the
product was currently $1.20, the average time between purchases was 20 seconds
and the
current delay between purchases was 15 seconds, the new price for the product
would be
$1.60 (1.20 x 20 - 15 = 1.60). In another form of the present embodiment, the
processor
110 takes into account of the upper price, or price ceiling, and lower price,
or floor price,
for the product. As previously mentioned, the system administrator can specify
upper and
lower price limits for a particular product. If, for example, the calculated
new dynamic
price exceeded the upper price limit, the processor 110 in stage 814 would set
the new price
to the upper limit price. Similarly, if the calculated new dynamic price is
less than the
lower limit price, processor 110 in stage 818 would set the new price to the
lower limit
price.
[00103] If the current time delay (t) between purchases is not less than the
average
time delay between purchases in stage 812, then the processor 110 in stage 816
determines
whether the current time delay (t) between purchases is greater than the
average time delay
between purchases. If so, then it can be inferred that demand for the product
has lowered,
and the processor 110 in stage 818 decreases the price of the product. In one
form, the
processor 110 reduces the price using Equation 16 (above). For example, if the
price of the
product was currently $1.20, the average time between purchases was 15 seconds
and the
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current delay between purchases was 20 seconds, the new price for the product
would be
$0.90 (1.20 x 15 = 20 = 0.90).
[00104] As should be appreciated, the processor 110 can consider other
factors, such as
the marginal cost, when adjusting the price in stage 818. For instance, in one
form, the
processor 110 also determines in stage 818 whether the new price is less than
the
predefined lower price limit, or floor, for the product. If the new price is
less than the
lower price limit, then processor 110 only sets the new price at the lower
limit. In another
embodiment, to prevent wild fluctuations in price, the dynamic pricing system
102 in stages
814 and 818 can dampen the price changes between periods. When in stage 816
the current
time delay (t) between purchases is not greater than the average time delay
between
purchases, the processor in stage 820 makes no price adjustment. In another
embodiment,
to prevent the price from being locked into a local maximum price, the
processor 110 in
stage 820 randomly adjusts the price.
[00105] A teclmique for dynamically pricing products according to another
embodiment of the present invention will now be described with reference to
flow chart
900 in FIG. 9. In this technique, the database 800 records the number
purchases of each
product in the dynamic pricing system 102. In one form of this embodiment, a
dynamic
pricing system 102 periodically updates the prices of each product for sale.
The periodic
update can be for every second, every minute, hourly, monthly, and/or yearly,
to name a
few time periods. In one form, the price of individual products is updated
nightly. In
another form, the prices are updated every minute. Each product for sale
and/or type of
product for sale can be dynamically priced at different intervals and/or use
different pricing
techniques depending upon the nature of the product sold. For example, higher
priced
products, which sell at a slower rate, may have their prices less frequently
updated as
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compared to lower ticket products, which sell at higher volumes. Further,
groups of
products can be aggregately priced together.
[00106] As mentioned above, a system administrator can set the initial price
for a
product. In stage 902, the dynamic pricing system 102 stores in memory 112 the
initial
price as the current best price for the product. The processor 110 in stage
904 stores in
memory 112 the number of sales of the product at the initial price for a
specified time
interval and the profit generated (best profit). In one forin, the pricing and
quantity
information is updated daily in the tables 802 of the database 800. After the
specified time
interval, the processor 110 randomly changes the price within a range around
the best price
in stage 906. In one form, the dynamic pricing system 102 randomly adjusts the
current
price witliin -5% to +5% of the best price. As should be understood, the price
can be
randomly adjusted within different ranges.
[00107] In anotlier form, the price is randomly adjusted without having
specified upper
range limits. In stage 908, the processor 110 records in memory 112 the
quantity order (Qa)
at the adjusted current price for the same time interval as in stage 904 (for
example, daily or
every minute). The processor 110 in stage 910 checks to see if the quantity
sold in the last
time interval was greater than zero (0). If not, the processor 110 in stage
912 reduces the
current price.
[00108] For example, the processor 110 can reduce the price by $0.10
increments
when there are no sales of the product within the specified period. In another
form, the
price is lowered by a percentage of the current price, such as 10% of the
current price. If
the price reduction in stage 912 would reduce the current price below the
lower price limit,
when specified, the process 110 sets the current price to the lower limit. As
mentioned
above, the lower limit may be based in part on the marginal and/or fixed costs
for the
product. After the price is reduced in stage 912, the processor 110 in stage
908 records the
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quantity sold at the new reduced price for the specified time interval. In an
alternate form,
the processor 110 in stage 912 increases the time interval in which the
quantity sold is
recorded in stage 908. As should be appreciated, the processor 110 can both
reduce the
price and increase the time interval in stage 912.
[00109] When in stage 910 the quantity sold at the adjusted price is greater
than zero,
the processor 110 determines whether the profit at the current price is at
least equal to the
best profit stored in memory 112. In one form, the processor 110 determines
profit by
using Equation 2, above. As should be appreciated, the dynamic pricing system
102 can
take into account other factors when determining the profit. For example,
these factors can
include fixed costs and marginal costs, to name a few. If in stage 914 the
current profit is
equal to or better than the best profit at the best price, which is stored in
memory 112, then
the processor 110 in stage 916 sets the current price as the best price in
memory 112. In
one form, the processor I 10 also stores in memory 112 the quantity sold at
the now best
price such that profit can be calculated. In another form, the processor 110
stores in the
memory 112 the current profit as the best profit.
[00110] Following stage 916, the processor 110 randomly increases the price
for the
product within a specified range above the current price. This range limit can
be predefined
and/or determined through historical data. In one form, the random price is
generated
within a range from 0% to 10% above the current price. It should be
appreciated that the
processor 110 can use a number of techniques for generating the random (pseudo-
random)
numbers as would occur to those of ordinary skill in the art. When an upper
limit in price is
defined, the price of the product will only be increased to the upper limit
price. After the
price is increased in stage 918, the processor 110 proceeds to stage 908 and
records the
quantity sold (Qa) at the new adjusted price. By changing the best price in
stage 916 even
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when the current profit is equal to the best profit in stage 914, the dynamic
pricing system
102 removes old best prices that may be based on a different demand curve.
[00111] In another alternative embodiment, the processor 110 in stage 914
determines
whether the profit at the current price is better than the profit at the
recorded best price. If
so, the processor 110 proceeds to stage 916. If the current profit is equal to
the best profit,
then the best price remains the same, the current price is not adjusted, and
the processor 110
proceeds to stage 908.
[00112] When in stage 914 the current profit is less than the best profit, the
processor
110 in stage 920 determines whether there is a small price difference between
the current
price and the best price. The small difference can be based on a percentage
basis between
the prices and/or by a fixed amount. In one form, the small price difference
is less than or
equal to a one-percent (1%) change the price. In another form, the small price
difference is
two-cents ($0.02). It should be understood that other values can be used for
the price
differential. If there is a small price difference between the current price
and the best price,
the processor 110 proceeds to stage 906 and randomly adjusts the prices within
a range
around the best price.
[00113] Stage 920 reduces the likelihood that the best price will be stuck at
a local
maximum in profit. When this problem is not a concern, stage 920 can be
omitted. If there
is not a small difference in price between the best and current prices in
stage 920, the
processor 110 in stage 922 reduces the current price to halfway between the
current price
and the best price. For instance, if the current price is $1.00 and the best
price is $0.90, the
new adjusted price would be $0.95. As should be appreciated, the price in
stage 922 could
be reduced by some other fraction of the price differential between the
current price and the
best price, besides one-half. In one form, if the reduced price is lower than
the lower price
limit for the product, then the new adjusted price in stage 922 is set to the
lower price limit
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for the product. After reducing the price in stage 922, the dynamic pricing
system 102
proceeds to stage 908 and tracks the quantity sold at the new adjusted price.
As shown in
FIG. 9, the dynamic pricing system 102 using the technique illustrated in
flowchart 900
continues to periodically adjust the price of products.
[00114] In another illustrative embodiment, the period of time between
recording the
quantity sold is variable. This technique can be used in the applicable, above-
described
techniques for dynamically pricing products, but instead "quantity" value in
this technique
is replaced with "quantity I length of tiine period" value. For example, in
stage 908 of flow
chart 900, the "quantity sold / length of time period" value is recorded when
the time period
is variable. The dynamic pricing system 102 for instance would record one-
hundred
products per hour (100 products / hour) when one-hundred and fifty (150)
products are sold
in a one and a half hour (1.5) time period. Recording the "quantity / length
of time period"
values may improve sampling during slow order periods, such as at night. As
should be
appreciated, different products for sale on the dynamic pricing system. 102
may use
different techniques for dynamically pricing the products.
[00115) FIGS. 10-12 show an illustrative data flow diagram for the
communication
system 100. In FIG. 10, the merchant computers 116a-116c transmit information
about
new products. The information may include, for example, a minimum and maximum
price,
a product description, a universal reference locator for a website operated by
one of the
merchants that sell the product, and any other information that may be
pertinent to the new
product. This information is provided to the new product update web service
1002. The
new product update web service 1002 may reformat the product information, and
store the
information in a respective merchant database 229.
[00116] For example, a merchant database 229a may be associated with the
merchant
computer 116a, a merchant database 229b may be associated with the merchant
computer
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116b, and a merchant database 229c may be associated with the merchant
computer 116c.
The merchant databases 229 may provide the information, including price, to
the product
information database 227, and assign an extended-meta language (XML) universal
reference locator. The extended-meta language universal reference locator is a
simply
method by which to extract product information from the respective merchant
database
229. The data flow illustrated in FIG. 10 provides a means by which
information about
new products may be entered into the dynamic pricing system 102 from the
merchant
computers 116, so that new products may be searched for by the user of the
customer
device 124, and so that prices for the new products may be calculated as
described above in
FIGS. 7-9.
[00117] Turning to FIG. 11, each of the merchant coniputers 116 may transmit a
report
of sale to the dynamic pricing system 102 each time a product is sold via one
of the
merchant computers 116, which includes data regarding at what price the
product was sold.
When a customer buys a good from a web site that is served from the merchant
computer
116a, as opposed to buying a good directly from the dynamic pricing system
102, there is a
sale pertinent to determining a profitable price for that that good. When such
a sale occurs,
the respective merchant computer 116 may transmit the report of sale to the
dynamic
pricing system 102 so that information regarding this sale may be used by the
dynamic
pricing system 102 in determining a price.
[00118] For example, in FIG. 7, at 704 the reports of sale may be received by
the
dynamic pricing system 102 from the merchant computers 116. For further
examples, in
FIGS. 8-9 at 804 and 908, respectively, the information regarding sales may be
may be
received by the dynamic pricing system 102 from one of the merchant computers
116. The
reports of sale may alternatively contain information relating to a number of
different sales,
such as the number of sales for a product sold at a particular price over a
given period of
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time. For example, twelve toasters were sold at a price of nineteen dollars
each between
one and three o'clock in the afternoon. Of course, the reports of sale may
also include
information regarding a number of different products to reduce network
traffic.
[00119] This report of sale from the merchant computers 116 is sent to a
product
quantity web service 1006. The product quantity web service 1006 may reformat
the sale
related information, and store the information in a respective merchant
database 229. A
pricing algorithm process 1008 receives the sales notice information from the
merchant
databases 229, and receives product information from the product information
database
227. The pricing algorithm process 1008 may implement one of the methods
illustrated
above in FIGS. 7-9 to determine a new price for the product for a given
merchant. For
products sold via only the merchant computers 116, data from only that source
may be used
by the pricing algorithm process 1008. Alternatively, where the product is
sold directly
from the dynamic pricing system 102 as well as from the merchant computers
116, data
from each may be used by pricing algorithm process 1008. Alternatively, each
merchant
may chose to set a product sale price on their own, bypassing the pricing
algorithm process
1008 altogether.
[00120] Turning to FIG. 12, the pricing algorithm process 1008 transmit new
price
data to the merchant computers 116 and/or the product information database 227
once a
new price for a product has been calculated based on the report(s) of sale.
The pricing
algorithm process 1008 may store the new price data in the respective merchant
database
229. For example, the pricing algorithm process 1008 may determine a new price
for the
product exclusively for the merchant computer 11 6a, based on data from the
merchant
coinputers 116a alone, or in combination with other data. This new pricing
information is
then stored in the merchant database 229a, and used when customers who use the
graphical
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user interface 500 search for the product, such as when displaying a product
listing 526 for
the product.
[00121] Additionally, the new price data may be provided from the respective
merchant database 229 to a product price update web service 1010. The product
price
update web service 1010 may read the data from the merchant database 229
periodically, or
alternatively, may receive a price update notice from the merchant databases
229 when a
particular price is updated. The product price update web service 1010 may
reformat the
new price data from the merchant databases 229 and transmit the new price data
to the
merchant computers 116. In this manner, the new price for a product available
form a web
site served by one of the merchant computers 116 is synchronized with the
price for the
product displayed by the graphical user interface application 500 for that
merchant
computer 116.
[00122] FIGS. 13-14 illustrate the interaction between the graphical user
interface 500
and the dynamic pricing system 102 in more detail. In FIG. 13, the user of the
graphical
user interface 500 running on the customer devices 124 requests a search for a
product
using the new search tab 518, as shown in FIG. 5. The search request is
communicated via
the network 106 to a search web service 1012. The search web service 1012
reads the
product information database 227 to find information regarding the product.
The search
request may be very specific, such as "Sony DVD RDR-GX7", or may be broad,
such as
"DVD". The search web service 1012 will generate extended-meta language
universal
reference locators for matching entries found in the product infomiation
database 227.
These extended-ineta language universal reference locators may include
information for
one or more of the merchant computers 116. The extended-meta language
universal
reference locators are then transmitted, via the network 106, from the search
web service
1012 to the graphical user interface 500 running on the customer devices 124.
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[00123] In FIG. 14, after receiving one or more extended-meta language
universal
reference locators sent by the search web service 1012, the graphical user
interface 500
running on the customer devices 124 transmits a query that includes the
extended-meta
language universal reference locator(s), via the network 106, to a product XML
price feed
web service 1014. The product XML price feed web service 1014 queries the
merchant
databases 229 using the extended-meta language universal reference locator(s)
to obtain
pricing information for the product, which is then transmitted back through
the network 106
to the graphical user interface 500 running on the customer devices 124. The
graphical user
interface 500 may request pricing information in this manner from time to time
to update
the prices displayed in the ticker window 520 (shown in FIG. 5).
[00124] While the invention has been illustrated and described in detail in
the drawings
and foregoing description, the same is to be considered as illustrative and
not restrictive in
character, it being understood that only the preferred embodiment has been
shown and
described and that all changes and modifications that come within the spirit
of the invention
are desired to be protected.
44
