Variable Pricing Engine Using Continuous Adjustment Curves
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Solution Overview
Problem
Conventional 'quantity/price break' methodologies in product sales are inflexible and unfair to buyers, as they require fixed quantity levels for price discounts, leading to situations where buyers may not benefit from purchasing more than needed.
Innovation Solution
A method and system for variably pricing products and services using a computer-implemented 'pricing engine' that adjusts the per unit price along a calculated line between price breaks, allowing for more flexible pricing structures based on the quantity selected by the buyer, utilizing a software product with computer-readable instructions to store and calculate pricing as percentiles.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If conventional quantity/price break methodology is used, then pricing structure is simple and easy to implement, but pricing flexibility and fairness to buyers deteriorates
Solution Approach 1:
The patent implements dynamic pricing by replacing fixed quantity breakpoints with continuous pricing functions that adjust prices based on any quantity purchased. The system calculates prices along a curve rather than at discrete points, allowing the price per unit to vary continuously with quantity, thus achieving both simplicity and flexibility.
Solution Approach 2:
The patent changes the pricing parameter from discrete quantity levels to continuous quantity values. By implementing pricing along a continuous curve where price per unit is a function of quantity purchased, the system maintains mathematical simplicity while providing continuous adaptability to different purchase quantities.
2Device complexity
If fixed quantity levels are required for price discounts, then calculation complexity is reduced, but buyer fairness and total cost optimization deteriorates
Solution Approach 1:
The patent transforms the pricing model from discrete fixed quantity levels to a continuous function where price per unit depends on the exact quantity purchased. This allows buyers to achieve fair pricing at any quantity level, not just at predetermined breakpoints, while the mathematical formulation keeps calculations straightforward.
Solution Approach 2:
The patent uses a curved pricing function to represent the relationship between quantity and price per unit. This curve allows for smooth, continuous price adjustments that reflect true economies of scale, ensuring fairness to buyers while maintaining mathematical tractability through standard curve equations.
3Ease of manufacture
If discrete price breaks are used, then implementation simplicity is improved, but pricing precision and buyer benefit deteriorates
Solution Approach 1:
The patent implements continuous pricing parameters instead of discrete price breaks. The system accepts any quantity as input and calculates the corresponding price per unit along a continuous curve, providing precise pricing for every possible quantity while implementing the solution through simple mathematical functions.
Data Source
AI summary
A method, system and software product allows the seller of products or services to offer variable pricing while still basing that pricing on the quantity selected by a buyer. It also provides the seller with the ability to adjust the per unit price of any given product or service along a calculated adjustment curve that would exist between price breaks. Two values need to be stored for each plot point on the adjustment curve, the “quantity percentile” and the “price percentile.” To calculate the quantity percentile, the seller determines the difference in quantities between the start price break and the end price break for the specific adjustment curve that is being plotted. The “price percentile” represents the amount of the difference between the start and end price break that will be used to discount the start price breaks price at the quantity level that was calculated in the quantity percentile.