Pricing Strategy

Updated: 9/1/2022

Effectively and efficiently pricing your home is the #1 biggest missed opportunity when trying to manage your home. Sometimes hosts think "I'm booked 2 months in advance! I'm doing a great job!" but the unrealized reality is that they are likely under-pricing their home and that if they asked for a higher nightly rate they could have make substantially more money.

If you got $1,000 for the weekend and it was booked 60 days in advance, what if you asked for $1,200? or $1,300? Could you have made more money if you were more patient? And going a step further, what if you required a 3 night stay instead of a 2 night stay? Why book to someone for only 2 nights when you could have been patient and held out for a 3 night stay?

This is at the heart of what we're trying to solve. It's a super fine line between asking for more without being too greedy and loosing the opportunity to get a booking. We not only take a hands-on approach to pricing, but we also enable the help of a sophisticated 3rd party pricing tool called PriceLabs in order to help us achieve this! Let's dig into it!

The Goal - to make as much money as possible! it's pretty simple. That might come in getting more reservations, longer reservations or asking for more money, but we want to get the highest asking price we can!

The Strategy - to price your home the highest we reasonably can without being too greedy (and loosing the opportunity for a reservation). In order to accomplish this, we need to enable a Time-based Strategy.

Think of it this way - if a reservation is 6 months away, we want to ask for more! This might be a higher nightly rate, this might be a longer stay (3 night minimum) but the last thing we want is to get an average booking. Why? Because if we asked for more, we could have got an exceptional booking because we still had 6 months at our disposal! For this reason, we tend to be greedy deep in the future and more conservative as the desired date becomes closer. This is where we enable the help of PriceLabs to create the rules to automatically trigger and enable these sophisticated pricing rules.

How does PriceLabs work? PriceLabs helps in two main capacities:

(1) data signals - PriceLabs plugs directly into Airbnb/VRBO in "real-time" and uses this data to more accurately inform our listings' pricing (2) time-based rules - allows us to create time-based rules in order to help us maximize revenue

Examples help! Think about the Airline industry - they constantly change the price per seat depending on how empty a plane is, how far in advance a flight is, how many people searched for that flight, and more. We're doing the same thing but for your home! With PriceLabs, we look at those supply/demand signals (and more) to figure out how to price your home.

Let's use the example of Memorial Day. PriceLabs learn from Airbnb/VRBO that there are MORE inquiries than normal and FEWER homes available than normal, so it concludes that if we normally charge $400/night we should probably charge $700/night for this weekend.

It does this across every day and refreshed every single day.

Now that you understand the broad-strokes and strategy of what we're doing, I wanted to go a step further and give you a look under-the-hood. Truthfully, the best way to do this is to show you, so I created a few videos that go further into these details.

Please let us know if you have any questions!