Revenue management uses performance data, consumer behavior analysis, and market trends to inform pricing and distribution to maximize revenue.
The concept originated in the airline industry. We all know booking a flight to Florida for a week from now will be much more expensive than a few months away.
Since businesses know consumers will pay more for the same product under certain conditions, like time of year, availability, and more, there’s an opportunity to implement dynamic pricing strategies.
Dynamic pricing is the practice of using the current market demands to inform your pricing. That means keeping prices flexible to change with competition and the market to create maximum profit.
Whether it’s lowering prices during the week or hiking them on holidays, prices are optimized to improve revenue without turning away your customers.