Struggling to find the right price for your rental?

I’ll guide you through analysing your market and adjusting your vacation rental pricing based on demand.

Setting the right vacation rental pricing is crucial. Price too high, and you’ll scare potential guests away. Price too low, and you’re leaving money on the table. Striking the right balance is all about understanding your market and making adjustments based on demand, seasonality, and your competition.

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In this episode, I’ll guide you through how to analyse competitor pricing, understand market trends, and adjust your rates to maximise bookings and revenue. Whether you’re new to hosting or looking to optimise your current pricing strategy, this article will provide actionable tips to keep your rental in high demand.

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Analysing Competitor Pricing

Before you can set competitive pricing, you need to understand what similar properties in your area are charging. The easiest way to do this is by checking out comparable vacation rentals on platforms like Airbnb, Vrbo, and Booking.com.

Look for rentals that share the following characteristics:

• Location: Focus on properties in your immediate area or neighbourhood.

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• Property type: Compare homes with similar features, such as the number of bedrooms, amenities, and overall style.

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• Quality: Are their properties newly renovated or rustic? Compare rentals that align with your level of luxury.

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Once you’ve found a few similar listings, take note of their nightly rates, cleaning fees, and any discounts they offer for longer stays. By doing this, you’ll start to get a sense of the pricing “sweet spot” for your market.

Tip: Don’t just look at their base price. Pay attention to their occupancy rate and reviews. A property charging more may justify it with better guest experiences, which could be something you want to aim for as well.

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Understanding Market Trends

Pricing isn’t static. It fluctuates with the market, driven by factors like seasonality, local events, and even global travel trends. To keep your pricing competitive, you’ll need to stay on top of these changes.

Seasonality

Is your rental located in a ski town? Near a beach? Properties in seasonal destinations see demand rise and fall depending on the time of year. During high season, when demand is at its peak, you can raise your prices to reflect the surge in interest. During the off-season, however, you’ll want to lower your rates to attract budget-conscious travellers.

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Pro Tip: Look back at your previous bookings (or research if you’re just starting out) to identify your high and low seasons. This will help you predict when to raise or lower your rates.

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Local Events

Concerts, festivals, conferences, and sporting events can drive demand in your area. If your rental is located near a major venue or popular event site, you can adjust your pricing during these times to capitalise on increased demand. For example, if there’s a big music festival in town, you might be able to charge a premium for those nights.

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Bonus Tip: Set calendar reminders for major local events so you can adjust your prices in advance.

Strategies For Adjusting Prices Based On Demand

Now that you’ve analysed your competition and market trends, how do you use this information to adjust your prices? There are a few strategies you can use to ensure your rates stay competitive:

Base Rate with Seasonal Adjustments

Set a “base rate” for your rental that works for most of the year, and then adjust up or down based on high or low season. This keeps your pricing predictable but flexible enough to accommodate demand fluctuations. For example, your base rate might be $150 per night, but you could raise it to $200 during peak season and lower it to $120 during the off-season.

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Last-Minute Discounts

If you have vacant nights coming up in the next few days or weeks, consider offering a last-minute discount. Guests looking for a spontaneous getaway might be attracted to a lower rate, and this strategy can help you fill those hard-to-book gaps.

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Weekly and Monthly Discounts

Longer stays are a win-win for both you and your guests. They provide you with a steady income and less turnover, while guests enjoy a lower per-night rate. Offering a discount for weekly or monthly bookings is a great way to incentivise longer stays.

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Pro Tip: On platforms like Airbnb, you can set automatic discounts for guests who book a week or more, which can boost your chances of filling your calendar during slower months.

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Using Pricing Tools To Simplify The Process

You don’t have to adjust prices manually every day (although you certainly could!). There are several dynamic pricing tools that can do the heavy lifting for you. These tools use data to automatically adjust your prices based on factors like demand, occupancy rates, and local events.

Some popular tools include:

• PriceLabs: A powerful tool that uses algorithms to adjust prices in real-time based on supply and demand in your area.

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• Wheelhouse: Provides dynamic pricing based on data from local trends and competitor rates.

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• Beyond Pricing: A user-friendly tool that automatically updates your rates based on market trends.

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These tools take the guesswork out of pricing and can help you stay competitive without constantly monitoring your competitors.

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How do you determine your property’s pricing?

Let me know in the comments.

In Conclusion

Setting competitive pricing is an art and a science. By understanding your competition, staying on top of market trends, and using smart pricing strategies, you can ensure that your vacation rental remains both booked and profitable.

The key is to stay flexible. What works today might not work next season, and what works in your area may differ from other markets. Continuously evaluating and adjusting your rates will help you stay ahead of the game and maximise your rental’s earning potential.