Dynamic Subscription Repricing via Unit Cost Normalization
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Solution Overview
Problem
Existing e-commerce systems are limited in their ability to dynamically reprice online subscriptions in response to competing offers that do not offer identical products, quantities, or terms, preventing merchants from maintaining competitive pricing and reducing the risk of premature subscription termination.
Innovation Solution
A method and system that compare and adjust the unit pricing of online subscriptions based on alternative offers, accounting for differences in quantity, duration, and incentives, allowing for real-time price matching and adjustments to maintain competitiveness.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If existing e-commerce systems use simple price matching notifications, then implementation is simple, but they cannot handle competing offers with different quantities, durations, or product specifications
Solution Approach 1:
The system transforms competing offers into a standardized unit-cost format by calculating cost per standardized unit (e.g., cost per serving, cost per unit time) regardless of the original offer's quantity, duration, or pricing structure. This parameter transformation enables diverse offers to be compared on a common basis, resolving the contradiction between handling diverse offers and maintaining system simplicity.
Solution Approach 2:
The patent introduces an intermediary normalization layer that converts various competing offers (different quantities, durations, pricing structures) into a standardized unit-cost representation. This intermediary format serves as a mediator between the diverse input offers and the subscription repricing decision, allowing the system to handle complexity without exposing it to the user interface.
2Ease of operation
If merchants allow subscription cancellation at any time, then customer flexibility is improved, but merchants face risk of premature termination when competitors offer lower prices
Solution Approach 1:
The system continuously monitors competing offers and provides real-time feedback to the subscription pricing. When a competing offer is detected, the system automatically adjusts the subscription price or generates a counter-offer, creating a feedback loop that responds to market conditions and prevents customer churn while maintaining the ability to cancel.
Solution Approach 2:
The system performs preliminary repricing actions by proactively adjusting subscription prices or generating counter-offers before customers can cancel based on competing offers. This preliminary action prevents churn by addressing pricing competitiveness in advance rather than reacting after cancellation requests are initiated.
3Measurement precision
If systems compare only identical products, then price comparison accuracy is high, but they cannot reprice when competing offers differ in quantity or specifications
Solution Approach 1:
The system changes the parameter of comparison from absolute price to unit-cost (price per standardized unit). By normalizing different quantities, durations, and pricing structures into a common unit-cost metric, the system maintains comparison accuracy while becoming adaptable to diverse offer specifications. For example, different bottle sizes are converted to cost per serving, and different subscription durations are converted to cost per month.
4Stability of the object's composition
If merchants maintain fixed subscription pricing, then pricing stability is maintained, but they cannot respond to dynamic market conditions and competing offers
Solution Approach 1:
The system implements dynamic pricing by continuously monitoring competing offers and automatically adjusting subscription prices or generating counter-offers in real-time. This dynamic approach replaces fixed pricing with an adaptive mechanism that responds to market conditions while maintaining stability through automated, rule-based adjustments rather than manual intervention.
Data Source
AI summary
A method and associated e-commerce system for dynamically repricing an online subscription automatically identify a competing offer that offers a product that is equivalent to a subscribed product. If the competing offer offers a quantity of the equivalent product that is different from a quantity specified by the subscription, or if the competing offer is effective during a period of time that differs from a replenishment period of the subscription, the system automatically reconciles the differences and compares the resulting unit cost of the subscription product to the unit cost of the competing offer product. The system then determines whether it would be more beneficial to the subscriber to reprice a certain number of units of the subscription or to reprice the subscription for a certain period of time, and raises or lowers the price of the subscription accordingly as a function of this determination.