Today is going to be a healthy dose of practical pricing education.
Meg Park has been working in the vacation rental industry since 2007. She answered an online employment ad for a vacation rental company in Hilton Head Island and got a job working in the key office, and since then, vacation rentals have become her passion. She has an undergraduate degree in marketing, so she quickly moved onto marketing coordinator, then marketing manager, and then marketing and sales.
Dynamic Pricing vs Revenue Management
Dynamic pricing is the pricing for a specific pricing that is being changed to match the demand for a particular property. It’s incredibly focused on what the property is able to get. Revenue management is a broader look at finances. It takes into consideration what you are paying for cleaning, what you charge your guests for cleaning, whether you’re upcharging by a few dollars to increase your own personal revenue, looking at your bottom line costs in general. You have to be looking at both.
The goal of dynamic pricing is usually to get the maximum amount of occupancy possible, and that will occasionally mean going below the price you normally would. That’s why revenue management is important, because you want to make sure that during those times where your bottom line is lower you don’t go spending a lot of money on marketing or new furniture.
Using 3rd party price management software
There are tools you can use to help with your dynamic pricing, such as Beyond Pricing, but keep in mind that these are just tools. Doing your research and understanding your competitors pricing as well as the location and comparable spaces will often give you better results, so trust your research when these tools appear a little off. If there’s a big discrepancy between the prices, be sure to double-check your research.
How far out should you keep your calendars available?
This depends on your location, but a good rule of thumb is keeping your bookings available a year out. You also have to have your pricing tentatively decided that far out as well. Many rental management platforms won’t even show your property if you don’t have pricing set for a certain day.
You want to keep your far-out prices higher than usual and start to lower as the date gets closer, whether you’re doing this manually or using a tool.
What is “gap filling?”
Gap filling refers to when you have small areas of occupancy. Some renters will just leave it empty, but it does offer an opportunity. Make sure you are using listing sites for business travelers, where they may be looking for a one night stay and would rather not be in a hotel. They are also likely to pay a little bit extra, and they really only need a place to relax for the night. There can be more opportunity here than in leisure travel, even.