Dynamic Pricing for Vacation Rentals
I have read a number of articles recently on the different dynamic pricing tools available and one of the statements that I repeatedly see in the comments section of these articles is “That all sounds great, but I don’t even know where to start.”
Concerns range from how guests will perceive the tools (I.e. “You’re just gouging me for more money”), to having to give up control of their calendar to the pricing tool, to having to offer one night stays at rock bottom prices in order to make any money.
The fact is, you (property managers and owners) already use dynamic pricing whether you realize it or not. If you charge more during certain times of the year than others (summer, ski season, etc.) then you are using dynamic pricing.
Pricing Your Vacation Rental
So let’s keep it simple. Below are three more methods you can use in your dynamic pricing model to increase your monthly revenue, all without using a pricing tool.
1. Increase your rates and/or minimum night stay for weekend stays. I am surprised at the amount of owners and even rental companies that don’t do this.
2. Increase your rates during peak booking periods. Not when the stays happen, but when the bookings are made. (Ex. If a large percentage of your summer bookings are made in January, increase your rates in January when the bookings are being made.)
3. Lower your rates during periods of low occupancy and/or when fewer bookings are made. (Ex. If very few bookings are made in August for late summer stays, drop your rates a bit during that month.)
A robust dynamic pricing strategy leverages several different methods, but the above is a good way to expand your pricing strategy.
There are a number of good pricing tools out there right now. I encourage you to do the research and see which one might be a good fit for you. But in the meantime, you can take advantage of dynamic pricing methods now.
This article was written by James C. Sells, the Founder & Principal Consultant at VR Biz Consulting, a company that works with vacation rental businesses to maximize revenue and take their software from a cost center to a profit center.