Yield management is most closely related to which pricing strategy?

• A. Cost-plus pricing
• B. Dynamic pricing
• C. Penetration pricing
• D. Skimming pricing

Answer: (B)

Yield management centers on maximizing revenue from perishable, capacity-limited inventory by adjusting prices in real time based on demand, time, and how much inventory remains. This approach is a classic example of dynamic pricing, where prices change to reflect current market conditions and optimize revenue.

The idea is to price strategically as demand shifts and capacity becomes tighter or looser, so prices rise when demand or scarcity increases and fall when there’s more availability. This contrasts with cost-plus pricing, which bases price on costs plus a fixed markup and doesn’t respond to demand or inventory in real time. It also differs from penetration pricing, which starts with low prices to gain market share and doesn’t continually adapt to inventory levels. Skimming pricing sets a high initial price to capture early profits and then lowers later, but again it’s not about ongoing capacity-driven adjustments.