When $5 per Listing Loses You Money: The True Cost of a “Flat Fee” Dynamic Pricing Partner
When searching for the right dynamic pricing partner, many property managers and vacation rental owners fall prey to flat-fee pricing models. It’s not surprising. A flat fee of $5 per listing sounds like a fantastic deal. However, if you think it sounds too good to be true, you’d be right. Unlike revenue-share pricing, flat fees provide zero incentive for the pricing provider to work in your best interest. They collect those fees no matter what — even while generating missed revenue opportunities that frustrate you and your owners.
At Beyond, we often have property managers coming to us asking how Beyond compares to the low-cost, flat-fee providers. While we can talk about how we make short-term rental (STR) managers and hosts the most money, save them the most time, and go beyond for them with our incredible support team, data speaks volumes when it comes to backing up those differentiators.
We recently had the pleasure of winning a new Beyond customer from a low-cost, flat fee dynamic pricing provider. The team at Geneva Lakes Vacations has a fantastic set of properties in Lake Geneva, WI, a popular vacation destination in the Midwest, U.S. When we connected to their account, we were shocked to see that there were virtually no bookings for May through July, which should have been one of their busiest booking seasons.
When looking at the Beyond data below, it became clear that their price was significantly above 2021's average daily revenue (ADR) and pricing them out of any bookings. Based on 2021 ADRs, these mispriced days likely cost them over $15K in revenue!
The pain didn't stop there. As we continued the listing review, we noticed that the low-cost provider was recommending some extremely ill-advised pricing for the winter holiday season. As you can see in the chart below, pricing for the weekend (December 17) before Christmas was much higher than Christmas itself. Their pricing over-factored the day of the week and under-factored seasonal events, including Christmas. All of this added up to prices set at more than twice what Beyond would recommend.
Thankfully, the Geneva Lakes Vacations team had a gut feeling that their flat fee pricing provider wasn’t providing consistent, quality work. We’re thrilled to have the opportunity to partner with them to course-correct their pricing strategies to yield them more bookings at the right prices.
While $5 per listing sounded like a great deal, they were one of many to learn the hidden costs of these pricing providers: bad prices that cause them to lose out on bookings, leading to upset – and possibly lost – vacation rental owners. Next time, consider a dynamic pricing provider that’s aligned with your interests, and that makes money when you make money.
If you’re ready to make a change, don’t hesitate to get in touch with the amazing team here at Beyond and request a free demo.