Pricing your short term rental (STR) accurately is important for ensuring that your short term rentals are fully booked and that you are meeting your earning goals. The Best BnB Host has compiled a list of pricing strategies that will help you to optimize your earning potential.
Dynamic Pricing Tools
Many short term rental owners find that using an automated pricing tool can streamline the pricing task. Dynamic pricing tools are designed to use demand and occupancy data from other regional properties to set the optimal price. Some popular pricing tools are:
It is best to look at each site individually and find the one that best suits your needs. Using an automated pricing tool does not mean that you can not adjust your prices. There may be situations where you decide to lower or raise the nightly rates for your short term rentals. We will discuss those scenarios next.
When To Drop Prices
During periods of low demand, it is important to drop prices early to ensure you get booked before other properties. During the off season, it is better to be booked at a lower rate than to have a completely vacant short term rental. Periods of low demand will vary depending on where your properties are located. The same can be said for when your particular “off season” is.
Strategize Holiday Booking
While you may be confident that your short term rentals will be booked for holidays, you can raise your earning potential. Block major three day holiday weekends and the day before and after a holiday if it falls on a weekday. If you have a cabin that is 4+ bedrooms, unblock the dates four to six weeks out and increase the rates 20-30% in your pricing tool. Monitor the bookings leading into the holiday. If it does not book, drop your rates by 1-5% until it books. You can always come down on your price, but if you price it too low out of the gate, you lose the opportunity to maximize your holiday revenue. For studio to 3 bedroom cabins, unblock two to three weeks out and increase the rates 20-30% in your pricing tool.
Promote Direct Booking
If you have a direct booking site for your short term rental, use your property management software to block dates that are 90+ days out to the online listing sites such as AirBnB and VRBO. Reserve these dates for direct bookings only. Once within the 90 day window, open the online booking site calendars up. You could also consider offering a 10% discount if guests book through your direct site within the 90 day window.
Push Orphan Days
If you find yourself with orphan days that have not been booked, your best course of action is to reach out to the customers renting your STR before or after the vacancy. Fill up orphan days by offering guests a discount if they book the day before or after a stay. Typical discounts in this scenario are 10-20%. Many property management systems have the ability to automatically generate these types of emails.
Maximize Your Earning Potential
Dynamic pricing is the practice of varying the price of an item or service depending on the market conditions. As we have shown, there are many ways to do that and it is a practice commonly used in most markets. Using an online pricing tool is essential to facilitating the pricing of your short term rentals. Beyond that, making adjustments such as the ones we have discussed will make you more competitive in the rental market. If your goal is to decrease the number of days your property is available and increase the earning potential of your short term rentals, your pricing strategy will be critical to your success.
Karen is an EXP ICON real estate agent and private investor specializing in short-term rentals (Black Sheep Realty). She has been investing in and operating short-term rental accommodations since 2015. Her cash-flowing portfolio includes smoky mountain cabins, glamping resorts and Emerald Coast condominiums. She is a general partner in the Accelerate Capital Partners short term rental syndication. Karen is a smoky mountain resident who has developed a deep knowledge of the smoky mountain market. In addition to owning a multitude of cabins (Stargazer Stays), she also owns and operates The Heavenly Roast Coffee Shop, and Stargazer Stays Glamping Village. As a smoky mountain local and business owner she has exceptional insight into the dynamics and intricacies of the smoky mountain economy. She has developed an extensive network of local resources to assist out of state investors with all aspects of cabin setup (The Best BNB Host).
As Karen’s client, you’ll have the commitment, expertise and support of a local like-minded real estate investor to help you acquire and successfully manage a cash-flowing investment property. All of Karen’s professional information and opportunities can be seen at https://linktr.ee/karenlchenaille.