What is the primary economic goal of yield management?

The primary economic goal of yield management is to increase demand to maximize revenue. Yield management involves strategically adjusting prices and availability of inventory based on market demand to optimize revenue. By understanding patterns in demand, a business can set prices that reflect the value of the service at different times, allowing for maximization of income during peak demand periods.

This method is widely used in industries such as airlines and hospitality, where capacity is fixed and perishable, meaning that an unsold seat or room cannot be recovered once the time period has passed. By effectively managing yield, a business can not only increase its revenue but also ensure better alignment between capacity and consumer willingness to pay. Increased demand at the right price point is thus crucial for maximizing overall profits.