Browse Prior Art Database

Web based Dynamic pricing business practice

IP.com Disclosure Number: IPCOM000014713D
Original Publication Date: 2001-Apr-16
Included in the Prior Art Database: 2003-Jun-20
Document File: 1 page(s) / 37K

Publishing Venue

IBM

Abstract

This business practice maximizes the profit generated on each individual item by recalculating the selling price to fit the existing inventory and future build plan for the item. The future build plan is also modified to match the current sell actuals. Basically pricing is automatically reconfigured to slow demand down when supply is low and increase demand when supply is high. The process will also modify future builds to reflect the current demand of the item.

This text was extracted from a PDF file.
This is the abbreviated version, containing approximately 66% of the total text.

Page 1 of 1

Web based Dynamic pricing business practice

    This business practice maximizes the profit generated on each individual item by recalculating the selling price to fit the existing inventory and future build plan for the item. The future build plan is also modified to match the current sell actuals. Basically pricing is automatically reconfigured to slow demand down when supply is low and increase demand when supply is high. The process will also modify future builds to reflect the current demand of the item.

Current methods manually set prices for each item. Rarely is the price optimized to match the build/inventory plan. This leaves money on the table as you either have to much inventory at the end because you priced higher than market conditions and/or you run out of the part because you priced lower than the market conditions.

Web based selling due to its dynamic nature and ability to change in real time allows us to fix this problem.

This business practice creates a model to best determine selling price to maximize profit. Inputs into the model include the following:

1) Current inventory on hand
2) Current selling rate of item
3) Price demand sensitivity of item

The above 3 items are used to calculate the selling price of the item.

The model is optimized for to move inventory at best possible price

Current inventory is compared to the actual selling rate and future committed build plan which is inside the frozen zone. The frozen zone is the near term time line whe...