Don't sleep on your pricing. Get it right.

I am meeting with different hosts weekly.

Some have beautiful vacation homes around the country, some have properties outside of the US, others have many cabins on one property with venues.

They are all different in terms of the product and experience they offer.

Yet one thing is the same no matter where you are, and that is pricing.

There are many ways you can improve your property to start getting more bookings, but pricing strategy is one of the fastest and easiest ways to turn your property around.

You don’t have to buy any new furniture or upgrade your property in any other way.

In the comfort of your couch, you can identify a winning strategy, add about a $20 per month expense to your listing by enrolling with one of the dynamic pricing tools, and voila.

Which host are you?

Most hosts fall under 4 categories:

1. Those who don’t use any dynamic pricing tools. They set up one price for the weekend and another price for the weekday, with occasional spikes on major holidays. The obvious pro here is it’s easy. At any given time, you know your exact price. You don’t need to set up one additional tool or monitor it. But you are leaving money on the table by underpricing or overpricing yourself.You also give easy-to-use data to your competitors to undercut you slightly and win the booking.

2. Hosts who signed up for a dynamic pricing tool like PriceLabs, fully relied on all default settings, didn’t truly understand how the tool works or how to set it up, and got subpar results. In some cases, they even got disappointed and came back to option one, setting up prices manually.

3. Hosts who figured out how to set up a tool like PriceLabs, tried different pricing strategies, experimented like scientists, and got results. They occasionally look at PriceLabs and might tweak something, maybe once per month.

4. Hosts who did everything listed in #3, but kept monitoring and adjusting prices weekly, and sometimes more than once per week. They are aware of what is going on in their area at any point in time. They know what their competitors are charging and how they should adjust. They see direct results from their continuous monitoring.

Reply with the number to this email. Which host are you, 1, 2, 3, or 4?

When we started hosting...

When we started hosting, we didn’t start with 1 unit, we started with 4.

In the very beginning, we set up both a PMS, Hostaway, and a dynamic pricing tool, PriceLabs. We quickly figured out the PriceLabs default setting wasn’t an option and started experimenting. We were hosts #3 for several years, until we began monitoring and adjusting dynamic pricing several times per week. The results started climbing.

The same happened with other hosts. Many who were in category 1 or 2 saw results simply by becoming hosts in category 3.

I have personally done and seen some major changes in bookings within one to two weeks. The absolute record was the same day.

What happened to a micro-resort’s bookings after a pricing reset

One host with several units on one piece of land, a micro-resort, came with this request: we typically get bookings on the weekends, but that’s about it. We don’t get bookings throughout the week.

He came with the mindset that it was impossible to get more based on his personal experience operating in a certain way for years.

We analyzed his market and his competition, slightly improved his listing description and photos, and then did a major rework on pricing by identifying the right strategy, plugging in PriceLabs, experimenting with pricing, and monitoring it. We saw results within weeks.

He started getting longer weekend bookings and filling up the weekdays. He couldn’t believe it. His calendar was fully booked with just a couple of small one-day gaps here and there. He also started getting more bookings far in advance, all due to the right pricing strategy.

This is not just one example, but one of many.

Experiment and measure

Becoming host #3 is not that hard.

If you know what you are doing, you can set up one or two months for 2 pricing experiments, starting with your best assumption. Download data from the PriceLabs Market Dashboard to get directional understanding of what your competitors are doing.

Think about a possible strategy. Calculate it in Excel and set up the first one.

You want to measure what changes you made and how they are affecting the results. Then you will want to repeat this process with a couple of other strategies, even if the first one worked well.

To become host #4, you don’t need an enormous amount of time or some crazy setup. With one property, you can set aside 2 to 3 sessions per week, let’s say 1 hour on Monday evening, 1 hour on Wednesday, and 1 hour on Saturday morning, where you dive deep into your pricing and your competitors’ pricing.

As you go through this exercise, you will start noticing where you stand and whether your pricing strategy needs to be adjusted. Later, it could become just a 30-minute quick check once you have your processes set up.

If you have a property manager...

If you have a property manager, you want to understand what exactly they are doing in regard to revenue management.

How are they monitoring pricing? What are their methods?

You want to know the details of the details.

There are some great property managers out there who care and do the right thing.

And there are others who set up basic processes and try to get volume of listings under their books without the ability or team to manage such an important element like pricing for each listing.

So even if you have a property manager (and even if you perceive them as great), I encourage you to set aside a few hours per week and just wander around booking websites where your listing appears.

Write down what you notice.

How are you priced?

How does your pricing look against your competitors for far-out bookings?

What about weekly and monthly prices?

Are you competitive there?

You will naturally start having questions about your pricing strategy that you can address promptly.

One suggestion, isolate what you are monitoring.

It’s easy to start analyzing pricing and then switch to, “Oh, this other listing is offering X, Y, Z, we should do it too.” I am that way, and I have to hold myself to those constraints.

Focus your attention on one thing specifically, which is pricing.

That’s all for today.

Till next week, dear readers.