Pricing and Revenue Management with Optimization technology

Why is optimization needed for pricing and revenue management?

Pricing has become a key competitive advantage in many industries, particularly in travel and hospitality, where high fixed asset costs and low variable costs give companies great flexibility to differentiate prices according to customer preferences. Twenty-five years ago, airlines were among the first companies to recognize the value of yield management tactics and to implement them effectively. Today, these practices, now considerably more sophisticated, are used to great advantage in the hospitality, entertainment, leisure travel, and a growing list of other industries. Optimization provides a critical technology to devise and execute successful pricing and revenue management programs.

What types of pricing and revenue management problems can be addressed with optimization based technologies?

• How to price and allocate limited assets (e.g. seats, rooms, tickets) to optimize revenue depending on customer preferences and sales channels
• When to offer special promotions and deals and to whom
• When and where to release additional capacity to the market
• How to use loyalty programs to retain market share
• How to make the best offers to customers with flexible requirements

Benefits of optimization in pricing and revenue management

• Maximize revenue from fixed assets
• Retain and grow market share
• Improve customer loyalty
• Maximize load factors

Featured products