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What is Revenue Management and Pricing?

Revenue Management and Pricing (RMP) is a multidisciplinary research area that combines operations research, stochastic optimization, economics, marketing, behavioral science and data analytics to solve problems related to the management and pricing of scarce and perishable resources. Fundamentally, RMP is an applied discipline which derived its value from the business results it achieves and has had a transforming impact on the transportation (airlines, railway, rental car), hospitality (hotels, cruise lines, casinos) and retail (apparel, consumer goods) industries. At the same time, RMP has strong elements of an applied science and provides a rigorous mathematical framework to optimize the various levers of control that companies have at their disposal including capacity management, dynamic pricing, product bundling, assortment optimization, auctions and allocation mechanisms, and so on.

Revenue Management and Pricing is also an evolving discipline that is rapidly expanding its scope to a broad range of applications fueled by the rise of online marketplaces and Internet exchanges such as media and Internet advertising, sharing economy markets, labor and procurement platforms, healthcare exchanges, among others. The unique operational characteristics of these online marketplaces have led to a new and more sophisticated generation of RMP models that rely on search and matching algorithms, rating and review systems, pricing and assortment personalization tools and real-time learning capabilities, to name a few.


The Mission of Revenue Management and Pricing Section

The INFORMS Revenue Management and Pricing (RMP) Section promotes the use of operations research and analytics to study how to better match the supply of a good or service with its demand, often as a process happening over time, i.e., selling the right product to the right customer at the right price at the right time. While pricing and capacity control decisions are emphasized by operators of many traditional industries (e.g., airlines, hotels, and car rentals), recent developments in the sharing economy and in online marketplaces allow the control of a host of additional variables, such as information structure, liquidity, matching mechanism, and terms of trade.

The RMP Section supports innovative research and applications in traditional industries with the purpose of leveraging our understanding of increasingly complex market conditions and promotes the spread of best practices. At the same time, recognizing the new analytics developments, the Section is broadly interested in research and applications that enhance our understanding of how markets can be better designed and operated, and of how market participants interact to determine market outcomes. Our interests encompass a wide range of applications spanning retail analytics, online advertising, commodity markets, transportation-on-demand, and cloud computing, among others, and a mix of approaches including modeling, theory, and empirics, employing tools drawn from game theory, auctions and mechanism design, optimization, stochastic modeling, econometrics, statistics, and behavioral modeling.


To that end, our goals are:
  • To advance the development and application of operations research and analytics in the field of Revenue Management and Pricing in both traditional and innovative settings;
  • To promote the development and application of Revenue Management and Pricing in new industries;
  • To encourage the exchange of information among practitioners, users, and researchers in Revenue Management and Pricing; and more broadly, Marketplace Analytics, and
  • To promote high professional standards in the application of Revenue Management and Pricing.

For more information or further reading, see our Resources.


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