Blog

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.

Introduction

Price optimisation is the process of finding that pricing sweet spot, or maximising price against the customers willingness to pay.  Companies up and down the supply chain, both in B2B and B2C settings, rightly dedicate a massive amount of time towards price optimisation to ensure that their products will sell quickly at the right price while still making a decent profit.

What is Price Discrimination?

Price has a massive impact on your business. When setting your prices you must make sure that the price and sales levels you set will allow your business to be profitable. You must also take note of where your product or service stands in comparison with your competition.

On Wednesday, Philip Huthwaite BlackCurve CEO and Co-Founder, participated in a Twitter chat to discuss the "Importance of Price Optimisation" with members of the pricing community.

Do you have a conflict in your business between the pricing team and sales department? Certain members of your sales team probably think that all your pricing manager cares about is higher prices – which can make it more difficult for some in sales to close deals.

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.

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.

We hope your Christmas was a good one, but now it's back to work for the New Year with (here's hoping) renewed intentions and impetus to improve those margins. Unfortunately there are no quick fixes, "no work, no pain" will not boost your margins. It will require major strategic changes, but if you're truly serious about becoming more profitable, then read on.