Setting the right price for your properties in an ever-changing vacation rental market can be challenging. You should consider various factors such as market price, season, and nearby events to adjust the best rate and unlock your potential revenue. So, a dynamic pricing strategy will help you find the optimum price to maximise your profit margins.
In this article, we explain the importance of dynamic pricing and how to implement it.
What Is Dynamic Pricing?
Dynamic pricing as an example of price intelligence has emerged 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.
Dynamic pricing is a price optimisation technique for your vacation rental. It is an automated process that changes the price based on supply and demand. However, to calculate the rate, dynamic pricing applies a more advanced analysis of data rather than just considering supply and demand. Setting a price based on the market 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 price could be decreased based on dynamic pricing methods.
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.
- Prices can differ based on time. Various items can be discounted on special occasions on the calendars of different nations and cultures.
- Competitive 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 behaviours shown by customers. For example, if the customers visit the site after filling a survey or visit the website three times 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 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 implement 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.
To maximise your occupancy rate, 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 maximise your profits.
You need long-term profitability.
Dynamic pricing by charging the smartest rate based on real-time inputs allow you to earn higher annual income and get the best return overall.
Zeevou and Dynamic Pricing!
You can evaluate the market condition and set prices manually, but it’s a tedious and time-consuming process. Technology has made it easier and more efficient. Dynamic pricing tools help you tailor your revenue by maximising 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.