yield pricing

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Yield pricing or yield management pricing is a practice of charging different prices to different customers to manage capacity while maximizing revenues.

Example of yield pricing:

  1. A company may offer a discounted price on early release items. However, the number of things are limited. For example, a new model television set is being sold weeks before its release date. The company may offer a limited amount of early releases at a discounted price to encourage sales and create publicity.
  2. Companies may offer higher-priced products or services if they are purchased late. this is seen with many service oriented businesses who establish a service order cut off date. If services are ordered after the date, the rate or price is increased.
  3. A final example of yield pricing could be if a company has unsold inventory or a surplus of stock, they would offer the lowest price available to the customer. Retail stores like the Dollar Tree are based on this model of yield pricing, where they purchase surplus inventory and sell the items at a lower rate.
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