Yield Management

  
Yield Management

Also known as Revenue Management. Yield is also known as profit, i.e. Revenue minus Expenses. In other words Yield can be also called a Profit Margin. The need for Yield Management is ubiquitous almost in every industry. In the industries where business mix is fluid – the ratio of customers coming from each segment is different, the need for yield management is especially high, since the yield manager should not only be maximizing revenue, but she also has to maximize profit made by a hotel (airline, car rental etc.).

Another important aspect of yield management is dynamic pricing. Dynamic pricing is a situation when a certain product or service can have a price that fluctuates based on the supply and demand. The goal of dynamic pricing is to achieve equilibrium between supply and demand at which the profit is maximized. Hence, a yield manager is optimizing profit via balance between business mix with different profit margins and dynamic pricing.