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Finding the right price management strategy is an important element in running a successful business. Naturally, as markets change, so do the strategies required for price management.

What is Yield Management?

Yield management is the process of understanding, anticipating, and influencing consumer behaviour to maximize yield or profits from a fixed, 'perishable' resource, such as hotel rooms, tables in restaurants, theatre tickets, airline seats, media, telecommunications and energy, to name but a few.  The idea is to coordinate timing, price, and consumer buying patterns to achieve the best return.

Why is Price Management Important

In order to maximise your profits and stay ahead of the competition, you have to price at the absolute optimum level. What your business needs is an accurate price management system and the modern, accurate and most efficient solution to all your pricing demands is to invest in a price management software solution.

Pricing is the reflection of everything you do as a business, from your product development all the way down to a link to your website. Nothing else defines your business and its products more.

Are you still using spreadsheets to manage your prices? If that's the case, the future profitability of your business could be in jeopardy because relying on this method for all your pricing requirements has definitely had its day .

Any business wants to maximise profits by pricing their goods and services at the right level. Traditionally for many businesses price management has been conducted using Excel spreadsheets to calculate optimum prices – and to convey these prices to all concerned in the sales process.

Costs (direct or indirect) are the expenses that a business incurs in bringing a product or service to market. The selling price is the amount a customer pays for that product or service. The difference between the price that is paid and the cost that is incurred is the profit the business makes when the item sells. If a customer pays £10 for an item that costs the company £5 to produce and sell, the company makes a £5 profit.

Students of economics are taught that a business maximizes profits by producing up to the point at which marginal cost equals marginal revenue. This is true in theory - and actually irrelevant in practice.

In Part One we looked at B2B Pricing Challenges. In this following on article, we're exploring Business-to-Consumer Pricing Challenges (B2C). Charging the correct price for your product or service can be a tricky business – getting it right (or indeed wrong) can have a dramatic effect on your sales and profits.

In an earlier article, Innoware looked at the benefits of customised software in the context of Pricing & Quotation Software. As a follow-up, this article aims to explore the benefits of subscription based out-of-the-box pricing software (also known as Software-as-a-Service).