Pricing Strategies and Sustainable Supply Chains: Insights and Discussions

In what ways can a retailer such as Nordstrom take advantage of revenue management opportunities?

   A retailer like Nordstrom can apply revenue management by aligning pricing and product availability with differences in customer segments. Nordstrom serves both premium, service-sensitive customers and price-sensitive shoppers. Revenue management allows Nordstrom to charge full prices which are higher at their main stores and during the early part of a season when demand from fashion-driven customers is strong. Additionally, they can offer markdowns, clearance sales, and online-only deals later in the season to capture more price-sensitive customers without reducing the willingness to pay of early buyers. Nordstrom can also optimize the timing and scale of markdowns on seasonal apparel. Early in the season, prices remain stable; as inventory risk increases, strategic markdowns maximize revenue while clearing stock. Additionally, Nordstrom can allocate scarce high-demand items to premium stores first, reserving inventory for customers with higher willingness to pay. Online liquidation or transfer to Rack stores (its outlet division) supports revenue from lower-price segments. For in-store appointments (styling, tailoring, personal shopping), Nordstrom can carefully overbook to account for no-shows, just as airlines do, maximizing utilization of fixed labor resources.

What revenue management opportunities are available to a manufacturer? How can it take advantage of these opportunities?

   Manufacturers can use revenue management as they face fixed production capacity, multiple customer types, or long-term contract opportunities. Manufacturers are in a unique position to charge higher prices to customers who need short lead times or guaranteed capacity. Hence, they should take advantage of their position to provide discounts for buyers that are willing to accept long lead times or flexible delivery windows, while reserving space for higher value orders. Furthermore, they should offer bulk contracts for those that are willing to make larger purchases for the upcoming seasons. Doing so can help them lock in revenue for larger orders and being able to better manage available workload. Recently, an increasing number of platforms have started to allow upstream manufacturers to directly connect with consumers. In doing so, a platform commonly charges manufacturers commissions through the revenue-sharing format or fixed-rent format (Wang, 2024). Findings have revealed that when compared to the fixed-rent format, the revenue-sharing format, that allows lower per-unit commissions, lower prices, and higher demand, can be a better revenue strategy for the manufacturer but not so much as beneficial to the platform that would connect the manufacturer directly to the consumers. Hence, it would be be in a manufacturing companies best interest to seek out opportunities where they can remove the “middle man” and be able to also directly sell to consumers.

What revenue management opportunities are available to a trucking firm? How can it take advantage of these opportunities?

   A trucking company has a limited transportation capacity and its demand can also change with customer need and urgency. Yet, there still remains opportunities for trucking companies to improve their revenue flow, one way would be adjust their prices during holidays or end-of-month periods because this can be when the demand for shipping products increases. There can also be an opportunity in marking up their prices for customers that demand urgent delivery. Additionally, trucking companies can make improvements to their cash flow by lowering their prices for customers that are willing to accept flexible schedules or sharing their loads with other clients that are on a similar route. Doing so can help them capture price sensitive clients.

What revenue management opportunities are available to the owner of a warehouse? How can it take advantage of them?

   An owner of a warehouse can implement revenue management strategy to improve their revenue by promoting services such as priority loading/unloading, shorter lead times, and temperature controlled or secure zone opportunities for their clients. Additionally, they can take advantage of their position by charging a higher rate for storage during peak demand seasons, and then followed by offering discounts during off-peak seasons in order to bring in new customers and have the opportunity to lock in new clients on a long-term business commitment. A variation in inventory holding costs was observed and it was discovered that the total savings in inventory holding cost due to adjusting the inventory and pricing policies was found to be about 3%, which is a lot for a large company (Journal of Risk and Financial Management, 2021). By the owner making slight adjustments to the warehouse policies on prices, it can see an improvement in revenue if done correctly in a way that capture lost revenue from clients that are willing to pay a little more and still keeping existing cost sensitive clients.

Explain the use of outlet stores by retailers such as Saks Fifth Avenue in the context of revenue management. How does the presence of outlet stores help Saks? How does it help its more valuable customer, who is willing to pay full price?

   The presence of outlet stores helps by allowing Saks to segment customers by willingness to pay. This can be in the form of identifying high-end shoppers that pay full price at flagship stores, and cost sensitive customers that shop at outlets. By having outlet stores, the brand is able to provide cost mark downs on items that are out of season without sacrificing the prestige or price integrity of the mainline stores. This can allow Saks to keep strong margins from their main stores and still get out value from their unsold stock. Outlet stores can also help with more valuable full-price customers because premium customers can keep their perspective of brand prestige since lower prices can be sold away from the primary retail location.

Demand for hairdressers is much higher over the weekend, when people are not at work. What revenue management techniques can be used by such a business?

   Hairdressers can charge higher prices on weekends due to high demand, and offer weekday discounts to attract price-sensitive customers and smooth out their busy schedules. Additionally, they should require a non-refundable deposit from customers on the weekend in order to lower the possibility of no-shows and cancellation.

How can a golf course use revenue management to improve financial performance?

   A golf course can implement higher prices during the mornings and the weekends if these are the times where most people go to golf the most. They can then offer lower prices for late afternoons or on the days when there is the least activity in order to have a more spread out and smoother flow of revenue. Finally, the golf course can charge premium rates for non-members, and offer incentives to club members to encourage non members to sign up.

References:

Optimization of Inventory Holding Cost Due to Price, Weight, and Volume of Items. (2021). Journal of Risk and Financial Management, 14(2), 65. https://doi.org/10.3390/jrfm14020065Links to an external site. 

Wang, Zhao, Wang, Lai., (2024). "Strategic Choice of Commission Formats in a Supply Chain With a Platform and Competing Manufacturers," in IEEE Transactions on Engineering Management, vol. 71, pp. 9661-9678. doi: 10.1109/TEM.2023.3321338

-Miguel Virgen, PhD Student

------------------------------------

Further Discussions

Hi Miguel, I enjoyed reading your post.

This discussion post discusses about different opportunities and strategies of revenue management which can be applied to various businesses such as- retailers, Manufacturer, Trucking Firm and warehouse owners.

Retailers (e.g., Nordstrom): Retailers can utilize revenue management to set prices and determine product availability based on differences across their customers. For instance, they can charge higher prices at main stores or during the early weeks of a season, disclose markdowns/clearance sales as the season progresses, and ship first-arriving scarce items to premium stores.

Manufacturers: Manufacturers can charge higher prices to customers requiring short lead times or guaranteed capacity, while offering discounts for customers willing to accept long lead times or flexible delivery windows. They can also enter bulk contracts when a customer’s order size exceeds a specified quantity and delivers directly to consumers.

Trucking Firms: Trucking companies can raise prices during times of high demand (holidays, end-of-month), charge a premium for urgent deliveries, and lower pricing for customers who are willing to accept flexible delivery schedules or share trailer space.

Warehouse Owners: Warehouse owners can sell their premium services (priority loading/unloading, temperature control) at a higher price, increase pricing on warehouse availability during peak seasons, and offer discounts during off-peak seasons in order to achieve 100% occupancy

Outlet Stores (e.g., Saks Fifth Avenue): Outlet stores allow retailers to price discriminate based on willingness to pay, providing a place to sell unsold inventory at lower prices without harming the high-end image of the mainline store.

Hairdressers: Hairdressers can price higher on weekends when demand is higher and offer discounts during weekdays to attract more price-sensitive customers.

Golf Courses: Golf courses can vary their prices at peak times (mornings, weekends) and off-peak times, charge a premium on non-members and offer discounts to club members.

The discussion post broadly covers different revenue management strategies that can be implemented in any industry, and the examples and explanations are well presented showing the high knowledge on the topic.

It is noteworthy how in this context was mentioned the research conducted about optimization of inventory holding cost due to price, weight, and volume of items (Journal of Risk and Financial Management, 2021) what adds value to discussing potential benefits that could be achieved by adjusting pricing policies for warehouse owners.

In addition, it is good to see the mention of the study on strategic choice of commission formats in a supply chain with a platform and competing manufacturers (Wang et al., 2024) in this paper. This shows that there is also a research need for studying direct-to-consumer opportunities for manufacturers to improve their revenue management.

Overall, I think the discussion post provided an in-depth and expansive analysis about revenue management opportunities and strategies, meeting the required academic level and details. 

References

Optimization of Inventory Holding Cost Due to Price, Weight, and Volume of Items. (2021). Journal of Risk and Financial Management, 14(2), 65. https://doi.org/10.3390/jrfm14020065Links to an external site. 

Wang, Zhao, Wang, Lai., (2024). "Strategic Choice of Commission Formats in a Supply Chain with a Platform and Competing Manufacturers," in IEEE Transactions on Engineering Management, vol. 71, pp. 9661-9678. doi: 10.1109/TEM.2023.3321338

-Lydia Dekolo, PhD Student

---------------------------------

Miguel,

Fantastic job on providing content that is very insightful and informative. I’ve learned a lot from your discussion post. One question I found particularly interesting concerned the golf course. In my research, I found that price and strategy can be involved in the golf course system in many ways. One approach is to offer bundling discounts, whereby customers receive a discount when they bundle cart rentals, food, and beverages. Providing different bundles and varying them can help create dynamic tiered pricing. Also, offering dynamic pricing for weekdays to help drive traffic on slower days and times, and upcharging on the weekends would help with revenue. This would not only help from a revenue standpoint but also potentially spread customer demand, keeping the business steady and maintaining job responsibilities for the workforce.  Zhang and Zheng (2022) found that Many firms combine either tangible or intangible complementary products with main products, which produces significant effects on consumer experiences. Such a bundling strategy can help the firm extract enough profit from the complementary product market.  Concerning value-added services and products, if negative network effects are minor, a pure bundling strategy is recommended. If these effects are strong, a mixed bundling strategy is better for profits. Selling more value-added services can boost profits further (Qi et al., 2024). Therefore, it’s really important that companies analyze the products and services they offer and how their customer base will react on pricing strategy.

References

Qi, W., Li, Z., Ma, Y., & Liu, X. (2025). Optimizing Pricing Strategies for Product Lines and Value-Added Services: Accounting for Reference Prices and Network Effects. Managerial and Decision Economics, 46(2), 862–878. https://doi.org/10.1002/mde.4408Links to an external site.

Zhang, Q., & Zheng, Y. (2022). Pricing strategies for bundled products considering consumers’ green preference. Journal of Cleaner Production, 344, 130962. https://doi.org/10.1016/j.jclepro.2022.130962Links to an external site.

-Josue Aguilar, PhD Student

----------------------------------

Miguel,

          You did a very nice job in your discussion post, and I wanted to expand on one of the topics you raised. Your discussion of the trucking firm highlighted several strong options to maximize profits. One segment that is often overlooked, but where revenue management can create substantial value, is the return trip, particularly through strategic backhaul planning. Many firms focus intensely on the outbound load while neglecting the economics of the return leg, leaving trucks traveling empty or underutilized.

          Your idea of offering a lower price to customers who are willing to accept flexible delivery schedules directly supports improved backhaul utilization. For example, if a trucking firm based in Atlanta takes a load to New York for a customer who only requires delivery by Friday, that scheduling flexibility allows the firm to optimize the return trip. The firm can wait to pair that outbound delivery with a compatible backhaul load from New York back toward Atlanta, or even a nearby region, thereby converting what would have been non-revenue miles into profit.

           This idea of backhauling is a topic of recent research, findings by Peng, Wu, and Boriboonsomsin (2024), Their study shows that when carriers integrate backhaul opportunities into dispatch decisions, especially under flexible customer time windows, they can simultaneously reduce operating costs and increase overall route efficiency.  By applying a revenue-management lens to pricing flexible schedules, the trucking firm not only sets an appropriate discount for the outbound customer but also improves its ability to solve empty miles of a return trip.  In short, incorporating flexibility into customer pricing and dispatch planning creates a more profitable supply chain.

References

Peng, D., Wu, G., & Boriboonsomsin, K. (2024). Bi-objective battery electric truck dispatching problem with backhauls and time windows. Transportation Research Record, 2678(11), 1850-1862. https://doi.org/10.1177/03611981241246270Links to an external site.

-Steven Mutton, PhD Student

--------------------------------

Hello Miguel, 

You provided a thorough overview of revenue management opportunities across multiple industries. For retailers like Nordstrom, dynamic pricing is a critical strategy. As Chopra (2021) explains, retailers can charge higher prices during peak demand periods, such as holidays or new product launches, and reduce prices during slower periods to attract more price-sensitive customers. Combining this with inventory management ensures popular items are stocked appropriately while slower-moving items can be directed to clearance or outlet stores, optimizing overall revenue. 

For manufacturers, Chopra (2021) highlights strategies such as price differentiation and capacity management. By offering premium pricing for customized or urgent orders and efficiently allocating production capacity, manufacturers can maximize revenue while minimizing excess inventory. Similarly, trucking firms and warehouses can implement dynamic pricing and optimize capacity allocation to improve revenue collection. Chen et al. (2024) emphasize that learning demand patterns and balancing resources fairly can enhance operational efficiency, while Chakraborty et al. (2021) show how strategic allocation, like managing premium versus standard services, which can optimize returns. Warehouse owners, for instance, can adjust rental rates, offer tiered pricing, or provide value-added services to maximize revenue without compromising service quality. 

Finally, your points about outlet stores, hairdressers, and golf courses align well with Chopra’s (2021) insights. Outlet stores allow retailers to segment customers and sell slower-moving inventory while maintaining a premium experience in main stores. Service providers, like hairdressers and golf courses, can use dynamic pricing, overbooking, and package deals to smooth demand, optimize capacity, and maximize revenue. Across these industries, the combination of demand forecasting, pricing adjustments, and capacity allocation demonstrates how revenue management can significantly enhance both profitability and customer satisfaction. 

References 

Chakraborty, S., Basu, S., Ray, S., & Sharma, M. (2021). Advertisement revenue management: Determining the optimal mix of skippable and non-skippable ads for online video sharing platforms. European Journal of Operational Research, 292(1), 213–229. https://doi.org/10.1016/j.ejor.2020.10.012Links to an external site. 

Chen, X., Lyu, J., Wang, Y., & Zhou, Y. (2024). Network revenue management with demand learning and fair resource-consumption balancing. Production and Operations Management, 33(2), 494–511. https://doi.org/10.1177/10591478231225176Links to an external site. 

Chopra, S. (2021). Supply chain management: Strategy, planning, and operation (7th ed.). Pearson. 

-Miral Shomali, PhD Student

-------------------------------

Keywords:

pricing strategies, sustainable supply chains, supply chain management, pricing models, sustainable business, value-based pricing, cost-based pricing, green supply chains, business sustainability, strategic pricing, pricing strategies in sustainable supply chains, how pricing affects supply chain sustainability, sustainable supply chain pricing models, ethical pricing strategies in global supply chains, pricing strategies for environmentally responsible businesses, balancing cost and sustainability in supply chains, value-based pricing for sustainable products, impact of sustainability on pricing decisions