Yield Management is a variable pricing strategy used to maximize revenue or profit from a fixed, perishable resource (like airline seats, hotel rooms, or electricity) by selling the right unit to the right customer at the right time for the right price. Also known as revenue management, it involves predicting consumer behavior to optimize inventory availability and price. While traditionally used in travel and hospitality, the principles are now applied in e-commerce, particularly for products with similar characteristics: Perishable Inventory: Products with a limited shelf life (e.g., fashion items that go out of season, event tickets, fresh food). Fixed Capacity: A limited quantity that cannot be easily replenished (e.g., a limited edition product). Variable Demand: Fluctuating demand based on time, season, or other factors. E-commerce yield management uses dynamic pricing algorithms to adjust prices based on demand forecasts, time until expiration, competitor pricing, and remaining inventory. The goal is to sell each unit at the highest price the market will bear at that specific moment, thereby maximizing the total revenue yield from the available inventory.
