What Is Dynamic Pricing?
Dynamic pricing has emerged as a variation for fixed pricing and is taking precedence over fixed pricing in some industries. Hospitality, travel, public transport and retail are among the industries which have realised the importance of dynamic pricing to set flexible rates for their products and services.
With dynamic pricing, one can calculate the optimal price for their. It is an automated process that changes the price based on supply and demand. However, in order to calculate pricing, dynamic pricing applies a more advanced analysis of data rather than just taking into consideration supply and demand. Adjusting the prices according to the competitors’ is one way to determine optimal pricing. It can also be altered by the rate of a website’s viewers who have been successfully converted into buyers. If this rate is low, the decrease in the price is an alternative dynamic pricing method.
Nowadays e-commerce is the biggest fan of dynamic pricing. Apart from large companies like Airlines and Amazon, vacation rental owners are also aware of the importance of dynamic pricing to find the highest possible price that does not deter potential consumers.
Strategies of Dynamic Pricing
Dynamic pricing might apply one of the following strategies:
- Price can differ based on locality and geography, meaning that the supply and demand for different items are different in different places.
- Price can differ based on time. Different items can be discounted on special occasions on the calendars of different nations and cultures.
- Competitors’ pricing is useful to check if the price you set is too low or too high.
- Prices can be adapted due to the peak of demand and the inability to supply.
- Pricing differs due to different behaviors shown by customers. For example, provided that the customers visit the site after filling a survey or it is the third time they visit the website in a day, the price can be discounted.
Why is Dynamic Pricing Important in the Vacation Rental Business?
As a vacation rental owner, you need to set competitive pricing.
Knowing the nightly price of similar properties helps compare your prices with those of your competitors’. Searching and tracking the ever-changing nightly prices set by your competitors is very demanding if not impossible. In addition, prices vary constantly with the anticipation of special events and different holidays. If you need the knowledge of the competitors’ pricing, the trends and the implications of special events and occasions, then a dynamic pricing tool would be more than helpful to you.
As a vacation rental owner, you need to change your rates regularly.
You might have noticed fluctuations in the rates of accommodation of various kinds both as a guest and a vacation rental owner. This is because of holidays and special events taking place on the calendar. As a vacation rental owner, you need to set different rates for your property for different occasions. Obviously, you do not sell your vacancies with the same price on different occasions. Instead of fixing your eyes tirelessly on the calendar, you just need to apply a dynamic pricing tool. It can watch out for the changes and do the job for you.
You need an accurate minimum night stay algorithm.
In order to maximize your occupancy, you need to set exceptions for the minimum night stay rules. You can fill the vacancies in the availability calendar. Vacation rental owners do it manually whenever they expect the vacancy of their property between two bookings unless the cleaning and maintenance fees become too high. Dynamic pricing helps automate minimum night stay rules to maximize your profits.
Zeevou and Dynamic Pricing!
Dynamic pricing tools help you tailor your revenue by maximizing the occupancy of your properties and recommending the best price per night. Zeevou has the privilege of integrating with Beyond Pricing and PriceLabs. These two data-driven pricing algorithms increase your revenue and vacation rentals occupancy all through automation.
If these integrations look interesting to you, please follow our next two blog posts or contact Zeevou Partner Success Team now.