What is Revenue Management and Pricing?
Originally known as yield management and developed in the airline industry in the wake of deregulation in the late 1970s, revenue management controlled the price of seats. Although the focus was on opening and closing fare classes, the net effect was price changes, and as the discipline has evolved the line between revenue management and operational pricing has blurred.
What is unique about the pricing techniques championed by the INFORMS Revenue Management and Pricing Section?
Pricing has been around as long as people have traded. What differentiates the pricing championed by the INFORMS Revenue Management and Pricing Section is an ardent focus on the use of data, mathematics, and computers to better understand purchasing behavior and to recommend better prices. These pricing techniques tend to be operational – what price do I offer when the next customer walks in the door – thus distinguishing them from the activities typically associated with marketing departments – determining static price lists and running promotions, for example. Revenue management techniques, in particular, are frequently associated with high volume, computer-automated transactions such as those found in the travel industry, where millions of forecasts and price changes occur daily.
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