Yield management
Yield management is about maximising the total revenue or income which you can earn from your accommodation business by regularly adjusting your prices up or down, based on on your knowledge of what is happening on the ground and what your competitors are doing.
top
Yield Management: Price Reduction Example
- Lowering your prices can attract more customers. Price reduction is an effective way of maximising the total sales of a perishable product such as a bed-night or a guest-week.
- A self-catering operator has twelve holiday cottages available at €400 per week.
- Booking for the upcoming months has been very slow and the owners realise that they are unlikely to sell most of their units over the coming weeks.
- They decide to post a special offer on their website, offering cottages at €325 per week.
- They receive bookings for all the cottages and earn more total sales than they would have done, had they kept their price at €400.
Yield Managment: Price Increase Example
- The same self-catering operator is aware that a popular music festival is taking place in their local town during the last week in September.
- They update their website, increasing their holiday cottage rates to €500 for that week, as demand for accommodation is always very high for festival week.
- They sell all their cottages at €500 and earn more total sales than they would have done, had they kept their price at €400.
Remember!
If you are over the VAT threshold of €37,500 in sales value per annum, you need to add 13.5% to your price.
top