Pricing and revenue optimization - or revenue management as it is also called - focuses on how a firm should set and update pricing and product availability decisions across its various selling channels in order to maximize its profitability. A familiar example comes from the airline industry, where tickets for the same flight may be sold at many different fares, the availability of which is changing as a function of purchase restrictions, the forecasted remaining demand, and the number of unsold seats. The adoption of such systems has transformed the transportation and hospitality industries, and is increasingly important in retail, telecommunications, entertainment, financial services, health care and manufacturing. In parallel, pricing and revenue optimization has become a rapidly expanding practice in consulting services, and
a growing area of software and IT development.
In this course students learn to identify and exploit opportunities for revenue optimization in different business contexts. This includes a review of the main methodologies that are used in each of these areas, a discussion of legal issues associated with different pricing strategies, and a survey of current practices in different industries.
The course is about evenly split between lectures, cases and guest speakers. Last year's speakers were:
Scott Friend and John
Bible (Co-Founders Profitlogic, now Oracle; John is a CBS alum; Scott is now a partner at Bain Capital),
(Consultant; former head of RM at Delta & Starwood),
Bob Phillips (Founder & CTO, Nomis Solutions; former CTO Manugistics, CEO Taulus),
(Principle, Pricing practice, McKinsey & Co.)
Graham Young and Stan Ward, JDA (Media)
(Partner, Head of Pricing Practice, Deloitte Consulting)
Apart from a few case write-ups, the key course deliverable is a group term project on a topic of your choice that explores the issues discussed in class in a real business setting. Examples include:
Pricing analysis for IBM Server's unit
advertisements at WSJ
PRO in luxury real-estate
Pricing for Inter FC (Milan soccer club)
David and Lyn Silfen Professor of Business; Chair of Decision, Risk, and Operations Decision, Risk, and Operations
Costis Maglaras is a Professor at the Graduate School of Business at Columbia University in the division of Decision, Risk & Operations. His research focuses on quantitative pricing and revenue management, the economics, design, and operations of service systems, and financial engineering.
Costis received his BS in Electrical Engineering from Imperial College, London, in 1990, and his MS and PhD in Electrical Engineering...