Owning a vacation rental can be a very profitable business if it is priced correctly. To get the most profit out of your vacation rental there are a few things to consider when setting your pricing.
- Objectively look at your vacation home. Look at things like the amenities you offer, does it have pool, are you near major attractions, theme parks, ski lifts, the beach or other things that would be considered a major draw? Things like game rooms, stocked wet bar, premium bedding, washer and dryer, complementary transportation to and from the airport, lightning-fast WiFi, smart TV’s and other electronic devices. When was the last time the unit was renovated? Does it have new appliances, new furniture, bedding etc? Do you offer outdoor equipment like bicycles, pool and beach equipment, gas BBQ grill, golf cart and clubs if you are on a golf course? These perks go a long way to persuade your potential guest to book with you and not your neighbor.
- Know your competition. Get on several vacation rental websites and look at comparable units in your area. Look at their pricing, amenities, location and proximity to local attractions. What similarities do these units have to yours and what sets theirs apart from yours and vice versa. Also, check their calendars to see who is booking the most often and why. If you are offering your 3 bedroom, two bath unit for $500 a night but someone else has an almost identical unit for $300 then maybe you need to make some adjustments in your pricing. Remember, if someone can find an almost identical unit for less they will take the less expensive one most times. It doesn’t mean you need to be the cheapest but you definitely want to be the best bang for your buck.
- Know your booking potential. Look at the other similar properties you investigated in the last step and look for price groupings. What are the prices in the high season and low season. What is the pricing for holiday dates like Thanksgiving, Christmas, New Years, Easter, 4th of July, Labor Day and Memorial Day weekends. Also look at other major local events that can cause booking surges. Take an average of all of the rates for these dates and compare the average of a few other similar units to your own. This will be a good place to start with your pricing.
- Know what your rental is worth. This goes beyond your offerings, once you have several high (4-5 star) online ratings then you can push up your rates a little. If your rental is new to the market and has no positive rental history then it will be harder to justify your higher rates. Keep a close eye on your rates and the rates of the comparable units in your area. It will take some time in the beginning to get a good understanding of pricing the unit correctly but you will get the hang of it.
- Adjust your off-season pricing. Just because it’s not the high season doesn’t mean you can’t still make a profit. The off season is a great time to offer your potential guests a great value for their money. Use this time to promote local, not so popular events to help attract guests and fill your calendar. Keep a close eye on your competition’s rates and make sure you really focus on your properties strong points. Use this time to really push your advertising to gain exposure.