Vehicle Pricing Flexibility Score and Negotiability Index
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Solution Overview
Problem
Consumers face difficulties in understanding complex vehicle pricing due to lack of transparent pricing information and existing solutions failing to provide accurate, context-specific price data, leading to varying prices for the same vehicle at different times and locations.
Innovation Solution
A system and method for aggregating, analyzing, and presenting pricing data that includes a Price Flexibility Score, which measures the elasticity of transaction prices by vehicle model, incorporating factors like transaction price range, inventory, and sales data to provide a negotiability index, allowing users to assess potential purchase prices effectively.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of information
If consumers rely on traditional negotiation processes without transparent pricing data, then dealers can maximize pricing from individual customers, but consumers face serious negotiation disadvantage and cannot understand what a good price is
Solution Approach 1:
The patent segments pricing information by vehicle configuration (make, model, trim, options, package codes) to provide consumers with specific, relevant pricing data for their desired vehicle. This segmentation allows consumers to access transparent pricing information tailored to their specific vehicle interests, eliminating the information asymmetry that previously disadvantaged them in negotiations.
Solution Approach 2:
The patent introduces a computer system as an intermediary between consumers and dealers, providing objective pricing analysis based on aggregated transaction data. This intermediary delivers pricing flexibility scores and negotiability indices that help consumers understand fair pricing ranges, enabling them to negotiate more effectively without being at the dealer's mercy.
2Loss of information
If recommended prices are provided without context about price sensitivity, then consumers receive a single price value, but they cannot understand how sensitive that price is or whether a lower price would be acceptable
Solution Approach 1:
The patent applies dynamics by providing a pricing flexibility score that indicates how much the transaction price can vary from the recommended price. This dynamic measure shows consumers whether prices are rigid or flexible, enabling them to understand the range of acceptable prices and adjust their negotiation strategy accordingly, rather than receiving a static, uncontextualized price recommendation.
Solution Approach 2:
The patent changes the parameter representation from a single recommended price value to multiple parameters including the pricing flexibility score (indicating price sensitivity) and negotiability index. These additional parameters provide consumers with a comprehensive understanding of price variability and negotiation potential, transforming a one-dimensional price recommendation into a multi-dimensional pricing analysis.
3Measurement precision
If pricing data is aggregated at a high level without specific vehicle configuration details, then broad pricing trends can be identified, but accuracy decreases as product, location, and availability are defined with greater specificity
Solution Approach 1:
The patent segments transaction data by detailed vehicle configurations including make, model, trim level, options, and package codes. This granular segmentation allows the system to maintain high pricing accuracy for specific vehicle configurations while managing data complexity through structured categorization and automated processing of configuration details.
4Reliability
If dealers optimize pricing through individual negotiation with each customer, then maximum pricing can be achieved from each transaction, but consumers cannot understand what constitutes a good or great price
Solution Approach 1:
The patent provides feedback to consumers through pricing flexibility scores and negotiability indices that indicate whether a recommended price is good, great, or overpriced based on aggregated transaction data. This feedback loop enables consumers to understand pricing context and negotiate more effectively, while dealers can also use this information to optimize their pricing strategies based on market conditions and vehicle availability.
Data Source
AI summary
Embodiments disclosed herein can provide consumers with an effective tool for evaluating the negotiability of prices for vehicles in the marketplace. The tool may include a Price Flexibility Score which measures the elasticity of transaction prices by vehicle model. Specifically, a method may dynamically incorporate factors that affect price variance, convert those factors into variables, generate order statistics for each of the variables, apply a weighting factor to the variables to generate a price flexibility score for each make-model, and determine a negotiability index utilizing the price flexibility score. In one embodiment, the process of determining the negotiability index may be fully driven by a price flexibility model that incorporates a plurality of factors.