How to Price Your Short-Term Rental for Success?

Key takeaways:

• Go through the key factors that are important for short-term rental pricing and can help you maintain optimal pricing year-round.
• Explore different property options that can help you expand your short-term rental property portfolio.

Do you want to sell your short-term rental cheaply?

Do you want to leverage the surge in high seasons or the influence of local events?

In the US, the short-term rental industry generated $27.3 million in revenue across the 20 cities Taylor Swift visited during her tour in 2023.

So, having the right pricing strategy can help you balance maintaining an attractive offering and generating revenue.

But what are the factors that are important for short-term rental pricing?

Let’s find out.

6 Pricing Strategies for Short-Term Rental

While there are multiple strategies for pricing your short-term rental property, we have selected the top six approaches that can help you make smart pricing decisions.

1. Knowing What Others Are Charging

Competition analysis is the best pricing strategy for your short-term rental property. 

You should understand what’s happening around you regarding pricing and what others are charging.

Are there new trends in how people are pricing similar events or holidays? 

If you notice that your competitors are offering early booking discounts, you can leverage the opportunity and attract those looking for a deal.

Also, you should consider the target audience for your short-term rental. For example, corporate event attendees might not be as price-sensitive as casual tourists.

You can vary the pricing based on the amenities you offer to different audience sets.

By keeping a keen eye on your local competition, you can choose a pricing strategy that competes effectively and helps you book decent profits. 

2. Value-Based Pricing

Value-based pricing strategy focuses on setting prices that reflect the perceived value to guests and not just covering the costs.

It considers factors like how close your property is to different hotspots in the city. It focuses on the value guests can get from your rental property during their stay.

Still have doubts?

Let’s understand the strategy in simple language. If, for instance, your short-term rental is 5 minutes walking distance from major attractions in the town, you can set higher prices.

Why?

Because of the higher perceived value for guests visiting the city.

3. Dynamic Pricing

Apart from value-based pricing, a dynamic pricing strategy can be great for your short-term rental business. 

The strategy is based on short-term rental prices change based on timing and demand. When the season is on, you can charge more because of high demand, and less when it’s over.

The strategy helps maximize earnings and leverage your location’s seasonality. Dynamic pricing operates similarly to airline tickets or hotel rooms.

4. Psychological Pricing

Another interesting short-term rental pricing approach is psychological pricing, where guests’ perceptions are the key players.

How?

The approach plays on the overall guests’ perception to make prices more appealing and hook them to make quick booking decisions.

You can set prices just below a round number, like price your rental at £199 instead of £200.

It helps to create an illusion of a better deal.

Psychological pricing also works if you want to create a sense of urgency or fear of missing out. 

You can offer limited-time discounts or set early booking prices to instigate these emotions in the customer’s minds.

5. Cost-Plus Pricing

Cost-plus pricing is a great strategy where you can add a set markup to the cost of providing a service or product.

The strategy includes adding a fixed percentage to your cost of operating short-term rental property. 

For small businesses, cost-plus pricing provides a simple method to achieve profitability. It’s an effective way to maintain a competitive advantage in the bustling vacation rental market and keep your property fully booked.

6. Promotion and Discount Pricing

Using strategic discounts and special offers can improve your rental bookings, particularly during peak event seasons. 

Platforms like Airbnb often run timed promotions that spike interest and increase bookings. Offering price reductions for a limited period can make your property more appealing and draw in a larger crowd.

The strategy helps keep your rental calendar full and also builds a loyal customer base. Regular guests who attend annual events are more likely to return if they’ve enjoyed previous stays at a good value. 

Adopting this strategy effectively sets yourself apart in the competitive vacation rental market and ensures consistent bookings.

You can adjust your short-term rental pricing using these strategies. But if you require professional assistance with your short-term rental property, you can trust Pluxa Property.

Choose Pluxa Property as Your Trusted Partner

We, at Pluxa Property, specialize in assisting investors and landlords in achieving high returns with their property. 

As a leading UK property investment firm, Pluxa Property specializes in building and managing short-term rental portfolios. 

Our team specializes in providing end-to-end assistance to property investors in setting up the right pricing and achieving better occupancy rates with their short-term rental properties.

Contact us now and our short-term rental property experts to kick-start your optimization process for occupancy pricing. 

FAQs

What factors should I consider when pricing my short-term rental?

To price your short-term rental business like a pro, some important factors that you can consider are:

• Seasonality and upcoming holidays
• Analyzing your competition
• Setting up a minimum night rate
• Not ignoring last-minute books
• Considering proximity-based pricing
• Setting maximum and minimum lengths of stay

These factors can ensure you achieve the desired pricing irrespective of the peaks.

Should I offer discounts for longer stays?

Yes, offering discounts for longer stays can attract guests looking for extended accommodations and increase your occupancy rates. It’s a good strategy to keep guests longer and ensure steady revenue.