Marketing tips
How to use Smart pricing to your advantage
11 Dec 2024
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By Sophie Eminson
Unlike static pricing, smart pricing tools ensure your rates reflect the current market. It uses algorithms and machine learning to adjust your holiday rental rates based on demand, seasonality, and market trends. These tools compare competitor pricing, occupancy trends, and other factors to keep your listing competitive, without you having to manually tweak prices every other day. Think of it as turbocharged price optimisation for your properties. With Travelnest, you can easily switch on smart pricing. We want to make sure that it works for you, so sit down and get stuck into our guide to making the most of smart pricing as a vacation rental host.
Step 1: Know your costs
Before you start fiddling with our smart pricing tool, make sure you understand your costs inside and out.
Ask yourself:
What’s your fixed monthly cost (e.g., mortgages, utilities, property management fees)?
What’s your additional per-booking cost (e.g., cleaning fees, amenities)?
And most importantly, what’s your minimum viable nightly rate to cover all costs and still (ideally) profit?
Your minimum rate is your safety net - it ensures you’re not accidentally renting out below cost in an attempt to compete. It’s easy to get swept up in pricing wars, but without identifying income objectives and balancing these with expenses, you’ll risk leaving money on the table.
Pro Tip: Avoid pricing using guesswork. Use a simple spreadsheet or tools like Wave or QuickBooks to calculate your costs with laser precision.
Step 2: Set pricing the smart way
Once you've established your base price, it’s time to switch on smart pricing which you'll get instant access to when you join Travelnest.
Here’s what you need to do:
Set a minimum price: This should align with the costs we calculated earlier. Anything below this point = bad news.
Know your maximum price: Yes, there’s such a thing as overpricing. High rates around school holidays or peak seasons can turn away cost-sensitive customers, such as families. A thoughtful maximum ensures you stay in a sweet spot of balancing bookings and revenue.
Know your guests: Are your guests mostly families, couples, or corporate travellers? Understanding their budget helps you tweak pricing ranges that resonate with your key demographic.
For example, if you usually cater to families during summer, a price surge might seem clever, but families will retreat to budget options if stretched too far. Be mindful and strategic here - smart pricing isn’t about being greedy; it’s about being competitive.
Step 3: Test, review, repeat
If there’s one golden rule of smart pricing, it’s this - don’t just "set and forget." Yes, algorithms keep it flexible, but a little human insight goes a long way.
How to test your pricing strategies:
Short-term testing: After activating smart pricing, monitor how rates perform for the first 2-4 weeks. Are you seeing an uptick in bookings or revenue? If not, tweaks may be needed, such as reducing minimum prices, or making your calendar more flexible.
Check frequently for key dates: Are the rates set for prominent weekends or local events reflective of expected demand? Double-check holidays or festivals and adjust minimums if needed.
Update quarterly: Market conditions change, so make smart pricing a quarterly habit. Revisit your minimums and maximums to ensure they still align with reality.
Pro Tip: Most smart pricing tools allow overrides for specific dates or periods. If you know you want to price at a premium during an exclusive local event, don’t be afraid to override, but do make sure you let the tools do their job.
Why Smart pricing shouldn’t scare you
It’s tempting to think, "I know my business better than some algorithm!" But consider that smart pricing doesn’t replace your expertise - it enhances it, and Travelnest makes it easy by allowing you to turn on smart pricing so you can leave it to do its thing if you’d prefer.
By automating regular price adjustments, you’re freeing yourself to focus on the other things that make your vacation rental thrive - creating memorable guest experiences, crafting killer marketing, or maybe just finally having a day off.
Real-time pricing strategies level the playing field for small vacation rental hosts who want to compete with professional property managers. If done thoughtfully, it could maximise your revenue and simplify your life. Who doesn’t want that?
Final tips to master Smart pricing
Stay hands-on (a little): Smart pricing does the heavy lifting, but occasional manual adjustments keep things aligned with your vision and goals.
Leverage community insights: If unsure about pricing ranges, tap into forums or groups for Airbnb hosts and vacation rental owners. You’d be surprised what you can learn!
Always keep testing: Be flexible - what works for summer may flop in autumn. The more you adapt, the more profit potential smart pricing unlocks for you.
Make Smart pricing work for you
Smart pricing tools have changed the game for vacation rental optimisation. By focusing on real-time pricing strategies, establishing clear cost baselines, and testing frequently, you'll not only stay competitive but maximise your listings’ potential.
If you’re ready to give it a shot, join Travelnest to take the guesswork out of pricing. You bring the property; we’ll bring the tool to unlock its full potential. Learn more about other smart promotions!
Happy hosting!
