The Art of Flexibility in Revenue Management
Why Pricing in Revenue Management Should Always Be Flexible
One misconception about revenue management, especially in service-driven businesses, is the idea that pricing should be governed strictly by rules or static policies. The truth is, pricing is rarely—if ever—that straightforward. It’s more like a flexible, living thing that should adapt to both the market and the unique circumstances of each customer.
Here’s why flexibility in pricing isn't just smart—it's essential:
1. Pricing Reflects Value, Not Widgets
In service industries, you're not selling a uniform product like a widget. You're selling experiences, relationships, trust, and expertise. Each of these has a different value for different clients at different times.
For instance:
A hotel room during a busy conference week is worth more than the same room during the off-season.
Professional services might be more valuable to a client who urgently needs help than to one casually shopping around.
Pricing should reflect these nuances.
2. Guidelines Over Rules
Rigid pricing rules can hold your business back. Instead, focus on establishing solid guidelines that:
Help your team understand the boundaries.
Allow your team flexibility to make informed decisions.
Empower your team to take quick action to close deals when needed.
Sales teams that operate under clear guidelines rather than rigid rules feel more trusted and confident, leading to better results and higher morale.
3. The Power of Collaboration
Revenue management is most effective when it's collaborative. Regular team reviews—weekly or even daily—help everyone align around current pricing strategies, respond quickly to client needs, and share creative solutions.
This approach:
Encourages innovation in pricing strategies.
Helps identify opportunities for exceptions, especially for repeat clients or those with significant future potential.
Enhances your team's confidence and consistency in decision-making.
4. Trust Your Team
Empower your sales team to use their judgment within the established guidelines. When your team feels trusted, they're more likely to:
Take ownership of their decisions.
Act decisively and thoughtfully.
Prioritize both company goals and customer satisfaction.
Practical Tips for Implementing Flexible Pricing:
Hold regular, structured business reviews to discuss pricing and client feedback, ensuring your sales team knows that dedicated time and availability are consistently there to bring their issues forward for collaborative problem-solving and support.
Ensure your team has all the information or data they need to make informed decisions.
Ensure your guidelines are clear, accessible, and updated frequently based on market shifts.
Foster an environment where team members feel safe discussing pricing challenges openly.
Reward creative, client-centric pricing strategies that deliver strong results.
Be available (and make sure they know you're available) for impromptu problem-solving.
Pricing flexibility isn't just about making exceptions—it's about strategically maximizing value for your clients and your business.
For more insights or personalized consulting on revenue management strategies, visit kellyhaynie.com or reach out for tailored advice to help your business thrive.
