There are a lot of pricing tools out there, but how do you decide which one you should go with? In this episode of Vacation Rental Machine, Jon Bell and Julian Sage talk about dynamic pricing tool and why you should be using it in your Airbnb short term rental business.
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Julian Sage: 00:00 In this episode we’re talking about dynamic pricing, so stay tuned.
Julian Sage: 00:03 Vacation rental machine helps hosts like you learn how to start grow and scale your short term rental business. The show’s all about creating systems that help you automate your business, giving you more time and money freedom. If you’re ready to start living the vacation rental life then subscribed to this podcast today, come and join us on our Facebook group, the Host Nation where we’ll be talking about starting, automating, and scaling a short term rental business. Now onto the show.
Julian Sage: 00:28 Hey, welcome back Host Nation to another episode of vacation rental machine. In this episode, we are talking about dynamic pricing and why you should be using this in your Airbnb short term rental business. Now, dynamic pricing is one of those things that you need to start using right away because it does save you a lot of time and a lot of headache of having to go into manually change your prices whenever things are happening. So if you don’t already know, dynamic pricing is a tool that changes the price of your listing based off of a bunch of different factors such as like occupancy for the area, events, seasonality, a bunch of different factors that come into play that these dynamic pricing tools basically look at your location and they are able to tell based off of how everybody else is doing, how their booking is, whether there’s more people coming to the area and it’s able to price your unit accordingly.
Julian Sage: 01:22 Now in the last episode we were talking about smart pricing, which is Airbnb’s tool and we recommended not to go with that because Airbnb is going to be always trying to push occupancy over what your price is actually worth. Now, with dynamic pricing, again, you’re setting your minimum nightly stay, but it will basically have no cap to how high your unit can go to. So instead of you having to know how much your property should be worth at this particular time, like during a weekend or if there’s a concert or anything like this, these dynamic pricing tools are able to change your pricing accordingly. So John, what has been your experience with using dynamic pricing and when did you start using this in your business?
Jon Bell: 02:06 All right, well luckily, I knew to use dynamic pricing straight out of the gate. I went on a search for a couple of different tools and I heard of a couple. I started out using Wheelhouse and it’s still one of my favorite or one of the ones that I switched back and forth to just because I liked the usability of what actually goes on. So dynamic pricing, we all know what it is by now because we’ve talked about it over and over again, right? It’s how you separate yourself from being just an amateur to a pro. It’s also how you get page placement in Airbnb by having a low price, but really across the board or a span of a few days, you end up getting your average price. So being able to vary your price from day to day, week to week, month to month is very important.
Jon Bell: 02:52 If we’re running an automated machine, we need this to kind of happen in the background. We only want to go in and check these things every so often. We don’t want to go in every day. We also don’t want our prices just to be flat. One of the biggest things and mistakes that I would have made was although I’ve been here and this area in this market all my life, I don’t know everything that’s going on. Technically, I don’t care to know everything that’s going on, but I don’t know why people are coming here to travel or come run or whatever, but tools know what other vacation rentals are doing, what other hotels are doing, so it’s very important to stay competitive with those other people that are providing houses.
Julian Sage: 03:33 There’s a lot of debate online of whether you should just manually set your prices or if you should be using dynamic pricing. There’s actually been some cases on short term rental success stories, podcasts where someone actually was underpricing their property and when they turned on dynamic pricing it actually told them that they should be setting their house like an extra, it was like 50 to a hundred dollars more. And when they just followed what the dynamic pricing was saying and what was recommended to them, they made so much more money. So these tools are able to use these algorithms to look at events, look at what the ideal price for your property is. Some of them like I’ve been using Beyond Pricing for a little bit now and it tells you like what your health score is for your property compared to what everybody else’s is and it just has little tools that are able to tell you how you should be pricing, what should be the ideal price point. Now, John, there are a lot of tools out there. You know you mentioned Wheelhouse. I brought up Beyond Pricing but as a professional, what should we be looking for in dynamic pricing and how do you decide which one you should go with?
Jon Bell: 04:37 You should definitely be using a tool that makes things easier for you. One, it should tie into all of your booking channels or have some type of way to tie into the PMS which then ties into all your other booking channels. So it’s very important that we’re not making this process this step harder than what it needs to be. We want to make sure that pricing can be automated across the board and that we are setting it accordingly technically nightly and maybe we go in weekly to make some minor adjustments when we have unbooked days. One of the other things that a pricing tool does for all of us is, when we book and let’s just say somebody instant books and now we have a three to four day gap, pricing tool can then go in and say, Hey, I got a gap policy which says I can lower this span of days by another percentage point or 10 points or whatever you said it to and it can set that and then you might just get another notification saying, Hey those other days book because it was lower. Now, you don’t have a gap in your calendar. If you’re going for that high occupancy, that’s nothing but extra revenue. Days that probably would go unbooked are now booked,
Julian Sage: 05:46 So every tool is going to be a little bit different. They are going to have different ways that they are able to service you, but there are so many out there and it really is just finding one that best suits you. Not all of them are going to be able to maybe price across all these different platforms. Some dynamic pricing tools are only meant for certain types of channels that you might be hosting on. But if you’re just starting off and you’re just listing it, let’s say on Airbnb, then any of these dynamic pricing tools is going to list on Airbnb and it’s just really finding the one that best suits you. But as a professional, as someone that’s trying to create a vacation rental machine, you definitely want to be using some sort of dynamic pricing
Julian Sage: 06:25 So question of the day, which dynamic pricing tool are you going to be using? Leave it in the comment section down below, and until next time, Host Nation, keep on hosting. Hope you hosts found value in this episode. If you did, please go on over to iTunes and leave us a review, that would greatly support the show. If you’d like to connect with Jon, the community, and I, then go on over to our Facebook group, the Host Nation,
Julian Sage: 06:47 Talk to you hosts in the next episode! Keep on hosting.
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