Last week, the Beyond team hosted a webinar that covered the basics of dynamic pricing and how to automate a base price. Here’s a recap of what was discussed, as well as several questions we received (and answered).
What is Dynamic Pricing?
At its most basic, dynamic pricing allows your listing’s price to automatically increase or decrease based on several factors like demand, seasonality, and local market conditions. It’s the most efficient way to maximize revenue and occupancy rates for your property because it’s reacting in real-time—charging higher when there is greater demand and charging less when there is lower demand.
When manually pricing, most vacation rental managers set pricing for four or five seasons and holidays, and that can look like this:
Dynamic pricing, on the other hand, looks like this:
Without a dynamic pricing tool, you can see that in certain times, you’re leaving money on the table not charging enough—sometimes by more than 40 percent—while other times you’re leaving occupancy on the table by not dropping your prices quickly enough.
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Question & Answers Session
We had wonderful participation during the webinar and got some great questions. Here are a selected few we thought would be valuable to share!
Question: How do you price if there are very few competitors locally? I need to feel more confident in the pricing.
Answer: We use hyperlocal clusters and we will only create them if there are a statistically significant number of properties in the area. So this means that a grouping in downtown New York might be a few blocks, whereas a grouping in rural Scotland will be somewhat larger.
Question: How can I manage the prices further than 1 year out in Beyond Pricing?
Answer: In general we don’t recommend this. Holidays are easy to predict, but one off events may not increase demand more than a year out.
Question: Can the Beyond algorithm take proper account of the features of our listing? Ex. How do you handle having a pool vs. not having a pool?
Answer: This is where the Base Price comes in. The great thing about the Base Price too is it can change - so if you renovate your property for example. Or if you get a bad review/need to change photos - it’s really sensitive and a great way to understand if something in your listing needs to change.
Question: How far out does Beyond look? Is it able to recognize upcoming high seasons 6 months before hand?
Answer: Our pricing algorithm looks forward 365 days on a rolling basis, and yes it’s able to identify if there’s an upcoming high season six months in advance.
Question: What is the difference between base price and minimum price?Answer: The Base Price is the starting point for fluctuations, so think of it as your median price throughout the year. We'll go above it in periods of high demand and below it periods of low demand. The Minimum Price is the absolute lowest price you'd accept for a booking for one night.
Question: Are you working in the markets of Sun Peaks BC and West Vancouver BC?
Answer: You can check our map locator to see where Beyond is live: https://app.beyondpricing.com/market-map-locator
Question: How can I extend my pricing beyond a 12 month window to say 14 months to capture returners next year?
Answer: For any manual adjustments like this you can email email@example.com for assistance.
Question: Can you elaborate on the health score? How to improve it? What’s a good/average level?
Answer: The market-based Health Score is designed to be a feedback loop on how well potential guests are responding to your listing versus other listings in your area. It's a score of how your booking pace compares to the booking pace in your market, and can help you determine whether your listing is booking up too quickly, too slowly, or just right.
As a general rule, if your Health Score is under 60, we need to make some changes. If it is between 60-80, there is room for improvement, but no need to panic. If your Health Score is between 80-100, you are performing well and do not need to make any changes.
Click here to read more about the Health Score.
Question: What’s a recommended range/percentage change between base and minimum price (to allow for maximum algorithm fluctuation).
Answer: There isn't one because the level of fluctuation really depends on the manager/owner's level of comfortability. Our suggestion is to set your Min Price as low as you feel comfortable, and come back every other week or so to make sure you're still comfortable with it.
Question: Does the gap fill go below set low price or stop at that price?
Answer: We never go below your Minimum Price set in Beyond, so reservation gap discounts will stop at your Minimum Price.
If the answer to your question wasn't addressed in the webinar or the recap above, please feel free to email us at firstname.lastname@example.org for assistance.
If you’re not using Beyond’s dynamic pricing tool yet, click here to get started!