What is Revenue Management? Business
5 mins read

What is Revenue Management? Business

There are many ways businesses can incentivize direct bookings, including offering discounts, exclusive deals, and loyalty rewards. Revenue management is a relatively new field that has emerged in response to the globalization of business and the advent of new technologies. Strategic RGM requires some investment in data and analytics, which can typically happen without a major step-up in talent in this area. Precision RGM harnesses data and cutting-edge analytical skills to get radically more granular in identifying opportunities and delivering on them precisely. Providing GAAP compliant reports is an absolute requirement for public companies and provides credibility for private companies looking for investors.

revenue management

Once you’ve got your answers, you can manage your revenue accordingly by doubling up or shaving down. The goal is to maximize revenue per available room (RevPAR) by managing room supply and pricing. As if it requires advanced accounting knowledge or a statistics degree to understand. In 2016, Casado ended up leading the company’s $18 million Series B funding round and has continued to fund the company through two additional rounds including its $100 million Series D in 2020.

Developing industries

Read more about revenue management here.

It was around this time that Kong caught the eye of Martin Casado, a general partner at Andreessen Horowitz and the co-founder of cloud computing company Nicira Networks. At first glance, Casado says, the company was far from a surefire investment. They spent the next few months completely rethinking everything about the company, experimenting with new ideas, ultimately renaming it and pivoting to an API-focused business. Kong strives to be the way into that nervous system by helping companies manage the hundreds or even thousands of different APIs they have to access to on a daily basis.

Effective Revenue Management Strategies

Properly setting and tracking revenue management KPIs is crucial for benchmarking success. Divide customers into logical segments based on common characteristics like price sensitivity and purchase habits. Revenue management allows you to make the most money from your existing products, services, or inventory.

SaaS businesses today need to be continually striving to uplift, place, and justify their product with customers. Traditionally, revenue management has been linked to hospitality and travel. With the right approach, any organization can start benefiting from revenue management. Implement tools to capture new data like customer segments, transactions, and preferences.

The goal is to sell the right products to the right customers at the right time. The goal is to optimize inventory for the most profitable customer segments. Kong also faces competition from some of tech’s biggest companies as Microsoft, IBM, and Salesforce all have API management products. North America dominates the market with the largest market share over the forecast period. This could seriously impact directly on your hotel income which is why preventing brandjacking requires a proactive and vigilant approach to safeguard your brand’s identity, reputation and hotel revenue.

A well-thought-out room-type strategy is a fundamental tactic to maximize yielding opportunities. For example, building various room type categories will allow you to apply supplements and restrictions between different room categories. The extra revenue and control over availability this provides is an essential technique at the disposal of revenue managers.

Doing so makes it more likely that customers will want to purchase its products, even if the company’s price points are somewhat higher than those of the competition. Branding only works if substantial investments are made in it for an extended period of time, and the firm’s products are sufficiently distinctive. A company can adjust its prices continually, based on ongoing changes in its estimates of demand and the remaining amount of supply on hand. Airlines routinely engage in dynamic pricing, so that the passengers on a flight may pay widely differing amounts for essentially the same seats. Hotels also employ dynamic pricing; for example, they raise room rates when there are major events in town that they know will increase the demand for rooms. The intent is only to increase revenues when doing so will also increase profits.

Revenue management helps businesses achieve this by using sophisticated and business-specific pricing algorithms to maximize revenue and grow their market share while minimizing costs and maximizing capacity utilization. A firm can offer a set of related products to its customers for a discounted price. For example, a travel business could offer a vacation bundle that includes airfare, a hotel room, and a rental car. This approach locks up all related purchases that a customer might want to make, thereby maximizing the seller’s revenue. A business can sell its products through different distribution channels in order to reach out to different groups of customers, possibly selling at different price points in each distribution channel.

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