Yield and Revenue Strategies

Yield management is a variable pricing strategy, based on understanding, anticipating and influencing consumer behavior in order to maximize revenue or profits from a fixed, perishable resource (such as hotel room reservations or restaurant inventory). As a specific, inventory-focused branch of revenue management, yield management involves strategic control of inventory to sell it to the right customer at the right time for the right price. This process can result in price discrimination, where a hotel charges customers consuming otherwise identical goods or services differing prices for doing so. Yield management is a large revenue generator. There are three essential conditions for yield management to be applicable: • That there is a fixed amount of resources available for sale. • That the resources sold are perishable (there is a time limit to selling the resources, after which they cease to be of value). • That different customers are willing to pay a different price for using the same amount of resources. Like what you read, let’s meet and discuss it further.