Integrating price volatility into revenue management: exploring the tradeoff between price fluctuations and strategic consumers

Chiara Morlotti () and Benny Mantin ()
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Chiara Morlotti: University of Bergamo
Benny Mantin: University of Luxembourg

Journal of Revenue and Pricing Management, 2025, vol. 24, issue 2, No 6, 178-189

Abstract: Abstract Price fluctuations largely influence consumers’ purchasing behavior in two opposite directions: they affect price sensitivity and the acceptable price ranges, while favoring consumers to exhibit strategic behavior by waiting for prices to come back down. Firms selling revenue-managed goods can exploit this tradeoff to efficiently implement revenue management practices. We illustrate how to incorporate price volatility into the classic Expected Marginal Seat Revenue model. Our results reveal that, in certain market conditions, such integration could result in a significant increase in revenue. We further provide guidance to support pricing decisions when faced with the price sensitivity—strategic consumers tradeoff.

Keywords: Revenue management; Pricing strategies; Price volatility; Price sensitivity; EMSR; Strategic consumers (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1057/s41272-024-00498-2

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