Index-Based Pricing Logic for Automated Deal Repricing
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Solution Overview
Problem
Existing price management systems face difficulties in efficiently generating and incorporating index-based pricing formulas, leading to cumbersome deal negotiations and inefficient price management due to the complexity of responding to changing index values.
Innovation Solution
A method is introduced that designates an index for a product, computes its price based on the index value, and incorporates a formula as pricing logic into deals, allowing for monitoring and re-pricing adjustments in response to index changes, including features like price protection and temporary adjustments.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If manual methods are used to generate and incorporate index-based pricing formulas, then pricing accuracy can be maintained, but the process becomes cumbersome and inefficient
Solution Approach 1:
The system enables automatic self-service pricing adjustments by monitoring index values and automatically computing new prices based on pre-defined formulas. The price management system autonomously updates pricing without manual intervention, eliminating the cumbersome manual process while maintaining accuracy through systematic automated calculations.
Solution Approach 2:
The patent replaces manual mechanical processes with an automated electronic system. The price management system uses computer algorithms to monitor index values, calculate pricing adjustments, and update deals automatically, substituting the manual mechanical approach with an efficient electronic automation system.
2Speed
If automated index monitoring is implemented, then pricing responsiveness improves, but system complexity increases
Solution Approach 1:
The system implements continuous feedback monitoring of index values against pre-defined thresholds and triggers automatic pricing adjustments when changes are detected. This feedback mechanism enables rapid pricing response to market changes while managing complexity through systematic automated rules and decision logic.
Solution Approach 2:
The price management system performs multiple functions within a single integrated platform: monitoring index values, storing pricing formulas, calculating adjustments, and updating deals. This multi-functionality improves pricing response speed while avoiding the complexity of multiple separate systems by consolidating capabilities into one universal system.
3Stability of the object's composition
If comprehensive price management is implemented across the enterprise, then pricing consistency improves, but data volume and administrative difficulty increase
Solution Approach 1:
The system performs preliminary actions by pre-defining pricing formulas, index thresholds, and pricing logic before market changes occur. When index values change, the system automatically applies pre-configured rules to maintain pricing consistency across the enterprise, eliminating the need for time-consuming administrative reviews and approvals.
Data Source
AI summary
The present invention provides a flexible pricing method for providing pricing adjustments for a product in a deal in response to price variations in selected indexes. The method comprises: designating an index for the product wherein said index has a published index value; and computing a price for said product based on said published index value. The invention also provides for periodically re-pricing deals with index-based pricing terms.