Teaching Pricing and Revenue Optimization

Pricing and revenue optimization, defined as the formulation and solution of tactical pricing decisions using constrained optimization, is becoming an increasingly popular subject to be taught at the MBA level. Perhaps the best-known example of pricing and revenue optimization is revenue management whereby airlines, hotels, and other companies seek to maximize operating contribution by opening and closing fare classes. However, a number of other important business problems including markdown management, dynamic pricing for e-commerce, and customized pricing are also parts of pricing and revenue optimization. This article gives an overview of the field for those who are considering teaching the topic to MBA students. I outline the scope of the area, describe specific topics that can be included, present a sample syllabus and provide some guidance based on my own experience and links to additional resources.