Question

What is the economic motivation behind Yield Management?

Answer 1

The economic motivation behind Yield Management is to maximize the returns or the revenue generation capacity from the limited resources that are available before the organization which could in terms of inventory or time in hand, etc. For example, an airline company pricing its seats available on a flight on a particular day in the most strategic manner to avail the maximum revenues from the bookings on a particular date. Similarly, pricing of a hotel room reservation for a certain day which falls on a peak season, in a manner that it yields maximum returns to the Hotel. So the economic motivation shall be to yield the maximum economic gain by keeping the pricing strategy variable in nature.