Yield management pricing is a broad term that describes how a service provider can secure higher revenues from its relatively fixed capacity. There are several major advantages associated with the use of yield management pricing. Through use of yield management, a firm can better compete against a low-cost provider. Yield management pricing is an effective mechanism to allocate a service provider’s relatively fixed capacity, and is also a more efficient alternative to providing discounts on a much broader scale. This article discusses how a service provider can develop and maintain a yield management system through completion of eight interrelated steps

Introduction

2. Yield management: Speculative science?

3. Optimal applications: What works, and when

4. Competition, utilization, pricing, and profitability

5. Yield management pricing: The basics

6. Developing and maintaining a yield management system

6.1. Step one: Setting up an organization for yield management

6.2. Step two: Ascertaining whether market segments exist

6.3. Step three: Determining the number of days the system will look ahead

6.4. Step four: Specifying class membership conditions: Developing rate fences

6.5. Step five: Calculating the number of booking classes

6.6. Step six: Computing the proper proportion of rates within each booking class

6.7. Step seven: Communicating updated prices to consumers

6.8. Step eight: Fine-tuning the yield management pricing model

7. Possible pitfalls

8. Assessing your readiness to adopt and maintain a yield management system

References

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