What is Revenue Management? What SaaS Businesses Should Know
Posted: Wed Dec 04, 2024 7:09 am
Revenue Management What is Revenue Management? What SaaS Businesses Should Know
In recent years, an increasing number of companies with revenue management organizations are hiring revenue managers and revenue operations professionals , and the market for revenue management solutions (software) is also growing rapidly .
Revenue management originally list of australia consumer email started as a revenue management technique in industries with seasonal fluctuations in demand, such as the airline and tourism industries, but after its great success in the airline industry, it has been adopted by a variety of industries.
It is also becoming more prevalent in the SaaS industry. For companies, increasing profits is a proposition. There is a lot we can learn from elastic pricing plans based on algorithmic supply and demand forecasts, and from examples of companies that went from the brink of bankruptcy to making a profit.
In this article, we will introduce the definition of revenue management, how to proceed with it, and revenue management measures in the SaaS industry.
What is revenue management?
Revenue management is a management technique that maximizes profits by predicting customer behavior and utilizing price elasticity to sell the right products and services to the right customers at the right time and at the right price.
This is also called yield management.
Background of the development
The prototype of revenue management originated in the US airline industry.
[1980s]
In the 1980s, as the US airline industry was undergoing deregulation, major airlines had to consider ways to compete with the low-cost LCCs (charter airlines) that were entering the market as a result of liberalization.
At a meeting held by major airline American Airlines to consider a pricing strategy that could compete with LCCs, the idea came up that "Many flights are flying with half the seats empty, so why not sell these empty seats at a bargain price?" This is a common idea now, but it was novel at the time.
Led by the Vice President of Marketing, American Airlines updated the inventory management function of its seat reservation system and developed a reservation system that applied special fares to reservations made up to three weeks before the flight. This was a success that was well received by customers and increased revenue.
This method first spread to the aviation industry and then evolved to spread to many industries.
In recent years, an increasing number of companies with revenue management organizations are hiring revenue managers and revenue operations professionals , and the market for revenue management solutions (software) is also growing rapidly .
Revenue management originally list of australia consumer email started as a revenue management technique in industries with seasonal fluctuations in demand, such as the airline and tourism industries, but after its great success in the airline industry, it has been adopted by a variety of industries.
It is also becoming more prevalent in the SaaS industry. For companies, increasing profits is a proposition. There is a lot we can learn from elastic pricing plans based on algorithmic supply and demand forecasts, and from examples of companies that went from the brink of bankruptcy to making a profit.
In this article, we will introduce the definition of revenue management, how to proceed with it, and revenue management measures in the SaaS industry.
What is revenue management?
Revenue management is a management technique that maximizes profits by predicting customer behavior and utilizing price elasticity to sell the right products and services to the right customers at the right time and at the right price.
This is also called yield management.
Background of the development
The prototype of revenue management originated in the US airline industry.
[1980s]
In the 1980s, as the US airline industry was undergoing deregulation, major airlines had to consider ways to compete with the low-cost LCCs (charter airlines) that were entering the market as a result of liberalization.
At a meeting held by major airline American Airlines to consider a pricing strategy that could compete with LCCs, the idea came up that "Many flights are flying with half the seats empty, so why not sell these empty seats at a bargain price?" This is a common idea now, but it was novel at the time.
Led by the Vice President of Marketing, American Airlines updated the inventory management function of its seat reservation system and developed a reservation system that applied special fares to reservations made up to three weeks before the flight. This was a success that was well received by customers and increased revenue.
This method first spread to the aviation industry and then evolved to spread to many industries.