Yield Management

Yield Management

Yield Management Jonathan Poland

Yield management is a pricing strategy used by businesses that offer access to fixed-capacity assets, such as airline seats and hotel rooms. The goal of yield management is to maximize revenue by achieving a high utilization rate for these assets, while also charging the highest possible average price. This can be achieved through the use of price discrimination strategies, which offer different prices to customers based on their willingness to pay.

Yield management is a valuable tool for businesses that operate in industries with high fixed costs, such as the airline and hospitality industries. By using data analytics to analyze customer behavior and market conditions, businesses can implement yield management strategies to effectively manage their revenue and maximize their profits.

Some specific examples of yield management include:

  1. An airline offering different prices for the same flight, depending on the time of day, the length of advance notice, or the level of flexibility in the ticket.
  2. A hotel offering different prices for the same room, depending on the season, the day of the week, or the length of stay.
  3. A rental car company offering different prices for the same car, depending on the time of day, the pick-up location, or the length of rental.
  4. A concert venue offering different prices for the same seat, depending on the popularity of the artist, the location of the seat, or the availability of tickets.
  5. A theme park offering different prices for the same ride, depending on the time of day, the day of the week, or the level of demand.

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