While there are literally hundreds of different vacation rental pricing strategies out there, not all of them might work for you, and your specific rental. Getting your pricing right is about striking a balance between what's fair and what's competitive enough.
If you're a first-time rental property owner, creating a dynamic pricing strategy is all about trial and error, too. But that's not to say you shouldn't do your own fair share of research on what type of pricing works in your region.
Don't guestimate your rates - get it right the first time with these fundamental steps. Read on for more.
1. Determine a Minimum Rate
Owning a vacation rental is essentially running a business. The bottom line is that you need to keep the lights on (quite literally!). This means you need to make enough revenue to cover your overheads. The only way to do this is to ensure you're earning the minimum amount to cover your costs.
This is why your first step is to determine what your absolute minimum in rates would be. Ensure that this covers all of your fixed and variable costs, i.e. your mortgage repayment, cost of utilities, taxes, etc.
Don't forget to include some wiggle room for unplanned costs such as damage to your property and routine maintenance.
2. Research Rental Pricing in Your Area
Local research is a great tool to use when trying to determine a rate that's both fair and competitive. The last thing you want is to drive away customers because you're priced too high, or priced too low.
Do some in-depth research on rental pricing in your area. Take a look on sites such as Vrbo, Booking.com, and Airbnb. Compare similar size and style rentals to yours and get a feel for what people are charging.
Take some advice and inspiration from the top-listed rentals on these sites and try to implement what they've done to sell their listing online.
While you're comparing rates, make sure to also do some research on what your competitors charge during peak and slow seasons. Always ensure your rates match the current demand.
3. Adjust Pricing to Local Events and Holidays
As a first-time rental owner you might not know that pricing changes far more frequently than according to the seasons. There are a plethora of events and holidays that impact the cost of rental rates.
Make sure you adjust your rates accordingly and do your research on what competitors charge around upcoming events and holidays in your area. You don't want to miss a golden opportunity to make extra income by failing to strike when the iron's hot!
4. Always Plan for Vacancies
It's important to understand and plan for slow seasons - there's no avoiding them. The reality is that it's highly unlikely your rental will remain 100 percent booked, 100 percent of the time.
The better you plan for these slow periods, the stronger your rental pricing strategy.
Need Help With Your Vacation Rental Pricing Strategies?
Determining the best rates to attract the best clientele is a balancing act that takes practice. As a first-time rental owner, you don't have to go at it alone with PMI Property Management on your side.
If you need expert advice on vacation rental pricing strategies in the Austin area, our team is here to guide you in the right direction. Want to learn more about how we can help? Reach out today.
