Optimizing the operation of power generation systems is one of the core objectives of Smart Grid. The area of Smart Grid focuses on this issue is Demand Response (DR). DR is an essential tool to limit the demand to flatten spikes. This can reduce the need of peak power generation units which normally are less efficient and operational for only very short time interval. Eliminating the peak power generation units will cut the price of electricity by a significant amount. This paper discusses about the implementation of variable price structure and incentive based methods for the implementation of DR. An actual day consumption pattern of Riyadh region from the last year is taken as initial demand curve for the implementation of developed model.