The practice of charging different prices to different consumers for the same product, based on what that product is worth to each consumer.
What exactly is yield management? Essentially, it's value-based pricing. A product's worth generally varies among different groups of peoplebusiness travelers versus vacation travelers, avid baseball fans versus those just looking for something to do on a Tuesday night. By characterizing a group whose members value a product similarly, but differently from other groups, a company can generally establish pricing mechanisms tailored to each customer group's values.
Warren H. Lieberman, "A Revolution is Brewing In Pricing," Los Angeles Times, June 6, 1990
ERP and supply-chain application vendors increasingly are pitching new pricing schemes that base license fees on a buyer’s revenue, total employee head count or even the financial return expected from using the software.
But the reaction of software buyers has been decidedly mixed. So-called value-based pricing often requires companies to kick in extra payments if their revenue — or number of employees, in the case of human resources applications — surpasses negotiated levels.
—Craig Stedman, “New fee plans promise flexibility,” Computerworld, November 9, 1998
What is the rationale for our pricing strategy? The pricing of services is a nebulous area. Cost-based pricing is often difficult to determine, and there are few formulas for effective value-based pricing.
Dan Thomas, "Strategy Is Different in Service Businesses," The Harvard Business Review, July 1978