RM and microeconomics concepts: Why would revenue increase?

Following our series of enlightenment of various RM concepts, let’s illustrate one - interesting -element in the use RM practitioners make of price discrimination in: Generating revenue where it is not “expected”, and getting customers to buy services when others don’t. This tactic also illustrates one of Robert G. Gross’ core principles for RM: “Sell to segment micro-markets, not to mass markets”.

Let’s set a business case.

A car park management company is willing to increase its revenue, and change its pricing policy. Currently, they have a fixed fare: $2.40/hour. They would like to draw an estimation of a new pricing policy:
· From 6am to 11am and 3pm to 6pm: $2.40/hour
· From 11am to 3pm and 6pm to 10pm: $3.60/hour
· From 10pm to 6 am: $1.50/hour

Those fares are not the result of any marketing research/interview/survey. The following graphs represent Supply and Demand curves…necessary to evaluate the revenue, and the revenue reached under each pricing strategy.

The park has a total capacity of 150 cars.

Single price optimization


Price discrimination (3 prices)


The incremental gains reach +45% with the change in pricing. The projection is not realistic in the sens that most of the time a car park is not full all day long, but our goal is to show that theoretically, if demand can be segmented, revenue can be boosted.