The Four Levers of Revenue Management

Strategic Finance’s article on Revenue Management was released in November 2021.

Over the past century, accountants and analysts have been successfully employing management models and establishing causal drivers in partnership with executives to achieve strategic objectives involving costs and investments. This same work can and should be extended to sales and revenue.

The four key levers of revenue management:

  1. Pricing basis: Setting prices by how customer segments perceive specific value to the product or service, rather than based on costs or by reacting to competitor prices.
  2. Inventory allocation: Deploying the business’s capacity of goods or service depending on demand conditions and prices accepted by customer segments.
  3. Product configuration: Efficiently customizing or innovating goods and service offerings to meet the expectations of different customer segments while optimizing price points in each segment.
  4. Duration control: Optimizing resource constraints to meet the demand of customer segments by internally managing bottlenecks or externally influencing customer behavior.

 

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