Determining the price of a vacation rental can be a challenging and often stressful part of the marketing process. The price you determine will have a big impact on the property's bookings, which unfortunately may not always be positive. Setting your price too high will decrease your bookings, while setting it too low will make you lose out on valuable profit; the key to a profitable business is finding a balance.
Finding the balance may seem easier said than done, however with a little time spent on online research, the decision on a suitable pricing range will come a lot easier. Remember you can always adjust and adapt to the changing climates of the holiday home market later.
There are a number of actions you can take and factors to consider to ensure that you are setting an appropriate price for the property. To help you identify some of these and maximize your booking potential, we have come up factors to consider when setting the price of your vacation rental property:
Research Your Competition
In order to compete with vacation rentals in your area, it is imperative to conduct competitor research:
- Utilize online booking portals like HomeAway, AirBnB, Booking.com etc. to find out what other properties are charging
- Many vacation rental managers set their price different on their website than they do on a portal, so be sure to research independent websites of your competitors
- Take into consideration your competitor's location, the size of their property, the amenities they offer and what costs are included in the rental price
- As an indirect competitor, you will also be impacted by the price of hotels in your local area.
Determine Your Outgoing Costs
It’s all very well imagining how much profit you are a going to generate through managing a holiday home, but it's also crucial to determine your outgoing expenses. A successful vacation rental requires a lot of attention in order to attract guests and receive excellent property reviews.
- Make sure you take into account maintenance expenses like cleaning supplies, swimming pool cleaning chemicals (if there is one), gardening etc., the more guests you book, the more attention the property will be needed
- Be sure to look into how much holiday home insurance, taxes etc. will set you back
- And if you require housekeeping staff or a property manager, you will also need to consider their salaries.
Once you have an idea on what kind of price range is suitable for the property, you will need to determine and showcase high/low season prices, long-stay discounts, last-minute deals atc. Utilizing dynamic pricing allows you to pre-set the price of your properties based on seasonal and occupancy level changes, so when you enter in low season, your website will automatically showcase the low-season pricing. Better yet if the property still has last minute availabilities, your website will automatically adjust to showcase a lower price. Planning in advance and setting prices according to seasons or occupancy levels will help you to maximize bookings and generate an idea of how much income you could potentially receive in low seasons.
As a last note, remember that adjusting your pricing regularly can make a big difference in your revenue. Do not settle for the price you were charging for a property 5 years ago. Creating a year-end report of your cash-flow will be of great use when determining if you need to adjust the prices of the properties.
We hope you have found our post useful and that you now have a clearer idea of what to consider when pricing your holiday letting. Please feel free to provide any feedback or your experiences in the comment box below:
If you are looking for a new vacation rental website or better vacation rental software to help manage your pricing, inquiries, bookings and marketing, consider using Kigo. You can contact one of our vacation rental software experts at [email protected] or on the phone (Spain) +34 512 702 105 ‧ (France) +33 1 84 17 04 18 ‧ (USA) +1 (786) 292-0030