Yield Management for the Nonprofit Sector

Yield management techniques have been shown to be highly effective in many for-profit firms, led by the airline and hotel industries. Yield management is intended to maximize profits for a capacity-constrained service by price discriminating among customer types for essentially undifferentiated services. The authors extend yield management concepts to the nonprofit sector, where profit maximization no longer is a goal. A general heuristic is presented to assist decision makers in pricing decisions. The technique is demonstrated at a nonprofit child care center that provides discounts to low-income families.