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The role of accounting information in revenue management

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  • Huefner, Ronald J.
  • Largay III, James A.

Abstract

Revenue management (RM) uses differential pricing and other techniques to manage customer demand for a company's products and services. It judiciously trades off yield and spoilage, and brings rational approaches to pricing for goods and services with a limited shelf life. Because many types of businesses find that growing revenue has a disproportionate impact on operating profits, firms that know and manage their customer base often achieve better bottom-line results by growing revenue rather than by cost-cutting. Initially developed as a marketing tool for pricing airline tickets, today's numerous RM applications can benefit from accounting tools that help assess whether applications will enhance operating profit and monitor their success in doing so. Knowledge of a firm's cost structure, operating leverage in particular, and when to treat RM adjustments as special orders, are the principal accounting lynchpins. Opportunity cost variances and insights from the theory of constraints contribute to effective revenue management/profit enhancement programs. Use of proper accounting information and analytic techniques can help a tolerated union of necessity between RM programs and firm strategy become a desirable marriage of mutual choice.

Suggested Citation

  • Huefner, Ronald J. & Largay III, James A., 2008. "The role of accounting information in revenue management," Business Horizons, Elsevier, vol. 51(3), pages 245-255.
    • Handle: RePEc:eee:bushor:v:51:y:2008:i:3:p:245-255
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    References listed on IDEAS

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    1. Malasevska, Iveta & Haugom, Erik, 2018. "Optimal prices for alpine ski passes," Tourism Management, Elsevier, vol. 64(C), pages 291-302.
    2. Teodor HADA & Nicoleta BARBUTA-MISU & Teodora Maria AVRAM, 2016. "Financial CEMATT Method: a New Approach for Performance Assessment using Accounting Information," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 2, pages 10-17.
    3. PrzemysEaw Niewiadomski & Bogdan Nogalski, 2021. "Quality costs in the companyb," Zeszyty Naukowe Małopolskiej Wyższej Szkoły Ekonomicznej w Tarnowie / The Malopolska School of Economics in Tarnow Research Papers Collection, Malopolska School of Economics in Tarnow, vol. 51(3), pages 87-105, September.

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