Revenue Management in Service Organizations

Revenue management is concerned with maximizing revenue flows while controlling costs and offers a new framework for locating conventional management accounting concepts and methods, in combination with notions of yield management, pricing and process management. The revenue objective provides a uni [...]
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Revenue management is concerned with maximizing revenue flows while controlling costs and offers a new framework for locating conventional management accounting concepts and methods, in combination with notions of yield management, pricing and process management. The revenue objective provides a unifying goal for the aforementioned concepts and methods that are especially suitable for service organizations where revenue considerations are inextricably linked to the activities performed. This book places revenue management at the forefront of management accounting with cost management and performance measurement in supporting roles. Revenue management introduces new ideas such as yield management, while uniting previously disparate subjects such as project management, capacity costing, and the theory of constraints. Methods of pricing and their associated strategies are included as well as techniques for segmenting consumer markets. Our focus is predominantly on service organizations such as airlines, hotels, restaurants, cinemas, as well as professional service firms such as auditors, lawyers and architects.Most service organizations are different from traditional manufacturing in that services cannot usually be stored as inventory and are critically dependent on the quality of service delivery. In fact any organization that has service as a key part of its value strategy will benefit from a systematic understanding of revenue management. Our book will introduce the reader to some of the more important methods such as yield management using simple examples as well as providing practical guidelines to pricing and process management. Conventional management accounting concepts and techniques are included, but our emphasis is on their use in revenue management encompassing a focus on revenue drivers as well as cost drivers. We also use some old techniques in new applications e.g. the use of critical path analysis to model restaurant processes and key bottlenecks.