It takes time to figure out that sweet spot of a perfect rental price. The price of your rental can vary greatly based on multiple variables which include competition rates, seasonal rates, local events, and holidays.
To figure out the rental rate you need to do your research. First, you will need to know how much your monthly costs are compared to. Second, you will need to figure out how much you plan on pricing your rental by comparing similar rental prices and your monthly costs. Third, you will need to be aware of what events and holidays are happening around you. And lastly, you will need to figure out what your selling points are.
Stick with these tips and tricks and you’ll be a pro in no time.
Calculate your costs
Balancing your income and expenses can be a bit tricky when managing your rental property. Be aware of how much your fixed and variable costs are each months with your new investment.
Fixed costs are charges paid at the same time and rate each month. Examples of these costs include insurance, salaries, property taxes, rental lease payments, and interest expenses.
Variable costs are bills that change depending on how much you use them. Examples of these costs would be labor costs and utilities such as water and sewer, electricity, trash, internet, and tv service.
After calculating these expenses you can estimate how long you can rent out your property. Remember though, a lot of hosts don’t make much profit in the first couple of months. While you’re figuring out how to manage your vacation rental property, and what price point works best, you should expect the buildup of clientele to take time and effort.
Use a Dynamic Price Tool
Dynamic pricing tools are programs or additions to rental platforms which conduct and analyze market data. Since demand is always changing, dynamic pricing tools’ algorithms are constantly updating with the newest information on prices, local events, and seasonal popularity.
Beyond Pricing is a revenue management solution for rental managers and owners. They have supported over 340,000 properties since starting in 2013. They provide webinars, documentation, and videos to make training yourself easy. The company even provides online support through email, phone, and instant messaging. 90% of their customers have recommended this tool to other rental owners.
Adjusting your rates in response to the fluctuations factoring in the demand for vacation rentals can boost your revenue. Some hosts have even said their revenue has increased by at least 40%.
Finding your rental price DIY style
There are multiple companies out there who can assist you with a dynamic pricing tool, making figuring out your daily rental price easy. But what if you’d like to figure it out yourself?
There are a few factors that impact the price of your rental rates. You need to make sure what rates are going for with similar rentals in your area, your competitor’s rates during the seasons, and what events and holidays are happening.
- First, see what other vacation rentals are pricing their daily rates at by going on sites like Airbnb, Vrbo, and Booking.com. This will give you an insight into the average pricing for your type of rental. Make sure you are looking at rentals that have the same amenities, number of rooms, and add ons, like a pool, like you.
- Second, be aware of what others are pricing their rentals during different seasons. Your nightly rate should match the current demand, whether it’s during the peak of the season or not.
- Third, offer special rates during the holiday and popular events. Know which holidays and events will bring in the most from out of town. Adjusting your rates frequently to what is going on in your area will fill your calendar. This will also help maximize your earnings on individual nights.
- And fourth, plan for vacancies to happen. The goal is to book every night, but it’s highly unlikely. Reduce prices during the low season and increase prices during the peak of the season. This will help people book with you and fill up those vacancies.
After finding out your expenses, comparable rates, and who your competition is, look at what your selling points are. Each rental has something unique about them that stands out.
When comparing your rental to others, see what they don’t have, but you do. Use those differences as a selling point to entice people into renting from you. Whether it’s a hot tub or pool, freshly finished kitchen, or aesthetically pleasing bedroom, use what you’ve got to your advantage.
Know what your goals are as an investor before publishing your rental out into the world.
As an owner, how much would you like to make? How much work do you plan on putting in? Do you want to use the home half as a rental and half as a seasonal home for yourself?
If you are an owner relying on this rental as a second income, be flexible with your rates. It’s alright to be inconsistent with the profit you make. Offering discounts can help ring in customers during specific seasons to fill up those vacancy dates.
If you aren’t new to the rental game, take a look at your previous seasons. Compare the prices at different times of the year to see how each season did. This will help you price your rates fairly against other competitors.
Know recurring trends, like when you had the most bookings, when you made the most money, and when you did poorly. Being aware of how you did in previous years will guide you in how to set your prices in the coming.
Owning a rental can be like taking on a second job. Make sure you have a co-host to assist you in your new investment. A friend, a family member, or even a vacation rental management company who can manage all those detailed tasks for you. Having a helping hand on your side can help you figure out what’s best for your rental.