Trying to define the perfect rate for your vacation rental properties won’t make or break you, but it can be a rather important factor for your business. Yes, it can be tough finding the right price for your listing as you want to ensure you’re making enough money while not scaring away potential guests – but it’s not as difficult as you might think.
Where to Begin?
1. Remember that your pricing can change
The most important thing to remember when establishing rates for your property listings is that they’re not set in stone. You can always adjust based on season, proximity to holidays, any new upgrades or renovations you’ve completed, etc. Of course, you can change your rates daily depending on occupancy numbers and the need to bring in a little extra cash.
Having a pricing strategy that’s fluid will certainly keep you on your toes, but will also ensure that as often as possible, the price is right.
2. Break down the costs of your property listing
Simply put, do a cost analysis. How much are you paying for utilities each month? What is the cost of cleaning the listing after each guest checks out?
Once you figure out just how much it costs to maintain your property listing each month, you can define just how much you need to earn from guests in a given month to stay afloat. Then, factor in what kind of profit you’d like to make and adjust your pricing according. Like we mentioned above, your costs could easily be fluid each month. For example, your electricity bill could be higher in summer months due to air conditioning usage, or your cleaning fees might be higher in a month with higher occupancy rates.
Having a full breakdown of fixed costs will help you understand how you can set rates for your listings in a given week, month, season or year.
3. Factor in relevant extra costs and fees
Not to discourage you, but there is always more than meets the eye when it comes to running successful vacation rental properties. Maybe there’s a renovation you’ve been meaning to undertake that will not only cost money but will also take time away from when guests could be staying in your place. There are also times when unexpected costs come up, such as when your property is damaged by your guests or the normal wear and tear of time.
Take some time to do research on potential costs and fees that other property managers have been faced with recently and factor those into your process of setting rates for your listings. Check out forums, Facebook groups and the like to get a better idea of situations where you might have to pay more than you thought.
4. Check out the competition
It’s always helpful to get an idea of what you’re up against. Whether you’re researching property listings that are similar to yours in size or the amenities they offer, or you’re simply looking at industry standards in your region, it’s very helpful to know what the competition is up to.
Be careful, it’s easy to get swept up into the idea of what you are “entitled to” based on what your competition is charging for their listings. If you feel like your prices are too high, then lower them for a few weeks to see if that attracts more guests. If you’re not charging as much as the competition and still not seeing any results, it might be time to adjust your listing and add more amenities to make your properties seem more worthwhile.
5. Let an algorithm decide
Of course, you could always just leave it up to a computer to make your rate decisions for you. There are several different services you could use to automate your pricing based on a number of factors.
This takes the worry off your shoulders and allows you to constantly have the best rate for your listing without lifting a finger. You can learn more about different automated pricing tools right here.
Just do it!
There will likely be a lot of trial and error with the rates for your property listings, so the best way to get started is to, well, get started. After working through the steps above and doing your due diligence, you’ll have a base number to work with and then you can always alter it from there. With this guide, your vacation rental management business should be off to a great start.