For example, a travel company can use this technology to automatically raise prices around the time of an annual music festival in the area, or it could automatically update its pricing once festival dates are released. While dynamic pricing can sometimes result in higher prices for consumers, it can also offer discounts during periods of low demand, creating revenue opportunities in times of high price elasticity. Within a year, the program doubled the global impact of RGM and contributed more than 2 percent revenue growth. Crucially, even though the company took different actions across markets, the fundamental RGM approaches were consistent.
This data can then be used to make informed decisions about pricing and inventory levels. Creating accurate forecasts can be challenging in a rapidly changing market, but it is essential for businesses that want to stay ahead of the competition. With careful analysis and creativity, revenue managers can forecast demand, ensuring that their company operates at maximum revenue. Yield management is a pricing strategy that considers the time value of money.
Define the most profitable routes to market
In turn, forecasting enables companies to react when faced with low demand periods. It also allows them to design different rate levels and select optimal distribution channels. However, if you’re on flexible, monthly pricing plans like HubSpot, this may not always be the case. You may see you’re losing revenue but not customers, which means customers are going for cheaper plans.
This approach challenges resources to prioritize gathering market information, fostering a proactive rather than reactive stance. Leveraging this information allows for market segmentation, product adjustments through distribution, and the precise targeting of the right customer at the right time and price. In the first chapter of this eBook, we will go over the definition of what is revenue management in the hotel and hospitality industry. Everything will be explained from the fundamentals of revenue management to more advanced practices and strategies. Revenue management systems can also be used to automate price changes based on specific criteria.
The common thread is using data analytics to set optimal pricing and manage availability. Revenue management helps businesses strategically compete on value, not just price. Revenue management is a versatile concept that not only aims to maximise revenue during peak demand periods but also seeks to stimulate demand during slower periods, all while avoiding pricing cannibalism. The strategies involved address both short and long-term actions, constantly balancing revenue and profitability considerations. This flexibility even allows for applying lower rates during high-demand periods when deemed strategically advantageous.
Outsourcing & Turning Revenue Management into a Competitive Advantage
What we want to stress here is your capability to be flexible with your pricing. Think about how you can adapt what you offer and ways for people to pay to be as inclusive and personal as possible. Your pricing plans need to be as flexible as possible to accommodate as many clients as possible. HubSpot is a great example of flexible and accommodating pricing plans to match any business and its needs. Answering each of these questions should help you identify routes to market that work and those that don’t.
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