Performance Monitor: The Opportunity Costs of Revenue Management

Revenue management (RM) brings rational approaches to pricing for goods and/or services with a limited shelf life. The practice of dynamically pricing a perishable product across different market segments continues to be applied across an ever-increasing set of business arenas. While numerous consulting and software development firms preach the bottom line impacts of RM practice, little effort is applied to monitoring the success of RM systems once in place. The continued success of RM hinges upon the ability to link organizational performance to the pricing and capacity decisions of RM systems. This link both reinforces the financial gains attributable to RM and indicates opportunities for future improvement. This paper outlines Performance Monitor, a phased approach to performance measurement designed and implemented at Dollar Thrifty Automotive Group, Inc. The focus is on the impact of RM practice via a dissection of the lost revenue opportunities of historic decisions.