A manufacturer may mark up merchandise 30 percent. A more sophisticated manufacturer may have different markups for different lines, based on their popularity. The most sophisticated marketers actually have no set price. The price of their product varies by day, time, season, supply, demand, weather and numerous other factors. These marketers are called airlines.
Airlines know they can do nothing with an empty seat that has left the ground.
They want to fill that seat at the highest fare possible but they recognize that some fare is better than no fare. But the difference in final results, airline by airline, boils down to management decisions. A manager took a risk by conceiving of yield pricing, trying it, and finding it worked. Other managers take a risk every day by using judgment, along with computer support, to improve on that original concept. Numbers can tell you how various assumptions will work out, but they won t tell you which assumptions will work out.