Practical Pricing and the Restaurant Industry: Application of Revenue Management Principles to Pricing Menus and Services

Sunmee Choi

Chapter 16 in Revenue Management, 2011, pp 221-233 from Palgrave Macmillan

Abstract: Abstract Pricing is an important strategic lever for a firm’s profitability. The bottom line impact of pricing is well demonstrated by the fact that a mere 1 percent increase in price can lead to 15–20 percent increase in the bottom line when no increase in cost and no decrease in demand can be assumed. For example, for a product the current price of which is $10.00 and profit margin is 5 percent ($0.50), when the price of this product increases 1 percent from $10.00 to $10.10, the price increase of $0.10 goes directly to the profit since no cost increase is assumed. This 1 percent increase in price results in an increase in profit by 20 percent ($0.10/$0.50).

Keywords: Busy Period; Variable Price; Sales Volume; Revenue Management; Party Size (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-29477-6_17

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230294776

DOI: 10.1057/9780230294776_17

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().