Your vacation rental pricing tool should be saving you time while maximizing your revenue. Too many customizations can actually get in the way of that.
As a vacation rental property manager or Airbnb host, you always want to make sure you're getting the most out of your property. A common way to do this is by setting up dynamic pricing. This feature automatically adjusts your nightly rate according to demand, and this is what we specialize in at Beyond! However, it's not uncommon for hosts to spend hours on end customizing their dynamic pricing, thinking that they're maximizing their profits. In reality, that may not be the case. Some customizations are a great way to make your pricing strategy more effective, but too many may be counterproductive – and a sign that your vacation rental pricing tool is not working as it should.
In this post, we'll discuss why you shouldn't spend too much time on customizations and how this may actually cost you in the long run.
Poor Data Prompts Excessive Customization
First and foremost, if you find yourself spending too much time customizing your dynamic pricing, it may be because your tool is relying on bad data to begin with. Some dynamic pricing solutions rely on untested and unverified data to power their algorithms, passing these ill-informed pricing decisions onto your vacation rental business. These data sets may not accurately reflect the actual demand for your property or market, and they may not take into account relevant factors about your properties. As a result, you feel the need to apply endless customizations in order to combat this. Check your current vacation rental pricing tool for these red flags to see if it’s time to make a switch.
Remember, your dynamic pricing tool should be saving you time, not creating more work for you – which brings us to our next point.
Time is Money
As mentioned earlier, customizing your dynamic pricing can take up a lot of your valuable time. Not only that, but the time spent on customizations also takes away from other important tasks. When you consider the opportunity cost of your time, you may find that it's not actually worth fiddling with your dynamic pricing for extended periods. A good dynamic pricing solution should minimize the amount of input it requires from you to maximize your revenue. With your pricing and revenue management taken care of, you should have more time to focus on improving other parts of your business, like your guest experience.
Your Base and/or Minimum Price is Off
If you find the need for lots of customization to try and secure more bookings, it could be because your Base and/or Minimum price is off. Remember, your Base Price is the starting point for price changes and the price will flux up and down from here. Your Minimum Price is the absolute lowest rate you'd be willing to accept for a night. The goal is to make sure your rates can fluctuate as necessary given demand.
One way to tell if your Base Price needs adjusting is to check your property’s Health Score in Beyond. Your Health Score is essentially a measure of your booking pace and helps you determine whether your listing is booking up too quickly, too slowly, or just right. It shows pacing for 7 days, 14 days, 30 days, 60 days, and 90 days so that you get a good pulse on where your listings are as compared to other similar-sized listings in your market.
Here’s how you can set the right Base Price for your property using the Chart Tab in Beyond:
On the other hand, if your Minimum Price is set to a higher rate and you lower your Base Price, you might want to reassess your Minimum Price. (If your Minimum Price is set to the lowest rate you would feel comfortable accepting for one night, you shouldn't worry about changing it).
Trial and Error Is Less Effective Than You May Think
Lastly, customizing your dynamic pricing can be an exercise in trial and error. You may have to experiment with different settings and data points to find a pricing structure that works well for you, and this can be an expensive and time-consuming process. The more you experiment, the more you're sacrificing potential revenue. Instead, it's better to find a tool that relies on accurate, verified data and sets prices accordingly so that you don’t lose out.
When it comes to revenue management strategy, a few customizations is a great idea to ensure that your dynamic pricing tool is working for your property. However, implementing too many customizations might actually get in the way of all the work your vacation rental tool is doing, and it may be a sign that you need a change. If you feel the need to do that many customizations, it may be time for a new solution, one that automates the rights actions for you.
The key to successful dynamic pricing is finding a solution that's based on accurate demand and needs just a bit of information from you to do its job. A solution with dynamic features that customize your pricing automatically, like availability yielding, last-minute discounts, and dynamic gap price adjustments. By doing so, you'll be able to make sure you're getting the most out of your property without driving up costs or saturating your market. Did you know that hosts who use Beyond usually see a 35% increase in revenue when they use Beyond? Learn more!