MAN 4504 Lecture Notes - Lecture 19: Gross Margin, Variable Cost

• School: University of Florida
• Department: Management
• Course: MAN 4504
• Professor: Munson Adam B.

Document Summary

Revenue management: match supply to demand when supply is fixed. > if adjusting supply is impossible, adjust the demand. > segment customers in high willingness to pay and low willingness to pay. > limit number of tickets sold at a low price. Control the average price by changing the mix of customers: revenue management & margin arithmetic. Small changes in revenue can have a big impact on profit. > especially for high gross margin & low net profit percent industries: environments suitable for revenue management. Same unit of capacity can be used to deliver services to different customer segments at different prices. > this is so the variable cost of additional sales is low. > all possible customers cannot always be served. Capacity is sold in advance of demand. There is an opportunity to segment customers & different segments are willing to pay different prices.