How do you decide how to price your inventory? John M. Gonatos in his curio shop with assistant Niki Vasilikis: Tarpon Springs, Florida, 1942. State Library and Archives of Florida.</em

How do you price your inventory?
John M. Gonatos in his curio shop with assistant Niki Vasilikis, Tarpon Springs, Florida, 1942. State Library and Archives of Florida.

Most people love to travel; visiting new and exciting places is fun and interesting. Yet one of the most confusing things about traveling can be booking your airline travel.

Sometimes a ticket we expect to be reasonably priced turns out to be very expensive. We might book a flight to the same destination for a different date or a different time of day and the ticket is suddenly more affordable. Why would this be? Is it just random? Not at all. Like many products and services, airline ticketing is governed by simple supply and demand.

Airlines have computer programs that run seating capacity algorithms that determine the price of available seats on a second-by-second basis. Airlines even over-book flights on purpose to plan for “no shows,” so the planes run as close to full capacity as possible.

Radio and television stations price their inventory in much the same way as airlines, by supply and demand. As demand drives interest in supply, the rates should go up.

As a media sales manager at a radio or television station, one of your most important jobs is to maximize available inventory in order to generate as much revenue as possible. As a seller at a radio or television station, one of your primary jobs is to put demand on that inventory, so that the supply and demand pricing strategy becomes necessary.

The most talented sales managers understand that inventory, or yield, management is part mathematics and part gut. They also understand that communicating how your station prices its available inventory is important. Clients of radio and television stations, like travelers, want to know how prices are determined.

Educating your clients on your pricing strategy will be beneficial to your relationship with your customer. This will take the guess work out of planning for the client. Importantly, a client who knows how the station prices its available inventory can maximize their budget and get rates they feel are fair. This may require your client to plan and buy earlier, which benefits the station, plus, your clients can incorporate rates as they plan campaigns.

If you employ a yield curve pricing model, your station can control its pricing strategy and keep customers from being confused or upset about pricing. Pricing transparency will help your customers feel confident that pricing is not arbitrary, and that the station employs a set strategy that is applied fairly to all clients.

This also communicates positive things to your sales staff as well. They will know there is no favoritism behind the prices they get, and that if they communicate how the station is priced to their clients, they can benefit as well with happier clients and business that can be placed earlier to take advantage of softer demand.

Do you currently have a yield management strategy? Do you have a system that complements your gut instincts and local market knowledge? Currently there are a couple of solid yield management software systems available to sales managers to assist them in the mathematics part of the pricing equation. Check them out and see if one of these systems can help you maximize the seats on your plane.

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