Convergence Letter 25: Towards the 7th heaven of Revenue Management
Our Convergence Letters are published every two months. They mainly focus on issues about Telecoms, Media and Utilities, and they address topics as diverse as sustainable development or distribution.
Revenue management is an approach whereby the price of a service is adapted to the ability of the operator to deliver this service, as well as to its accepted and acceptable use by the client.
The SNCF (National Corporation of French Railways) has a wealth of lessons to be learned in this regard. Who would have believed 15 years ago that it would be possible to freely offer different prices for a single service? Today (long live the Internet), it has become customary to see train prices vary in ratios of from 1 to 6, depending on supply and demand criteria.
Telecoms operators may follow suit. MTN in South Africa was the first to do it, with discounts of up to 99% on the price of a telephone call... provided that the call is made from a remote spot at 3 o’clock in the morning! This approach makes complete sense today and could mark a real breakaway from the telecoms business model… the most important revolution since the birth of the fixed rate 15 years ago.