Dynamic Pricing

How Does Dynamic Pricing Work?

Automatically adjusts prices in line with supply and demand
Dynamic pricing is sophisticated software that utilizes live data to develop pricing recommendations. To put it simply, it changes the rental price to match supply and demand. Airlines and major hotel companies have been using this method for decades, and it’s continuing to be adopted by other industries for one reason – it works.

How Most Vacation Rentals Work: Most companies implement 2 or 3 pricing periods, based on estimated demand.
We have been the most pro-active company by changing prices by season, month and week and discounting to obtain bookings for last minute gaps.

But the problem with static pricing is that no matter how well we may predict, a property can be snapped up quickly for popular times of the year when significantly more could have been charged, losing the opportunity to achieve even higher income on popular dates. The algorithm is built to find pockets of revenue in areas other methods cannot.

It can automatically increase or decrease the price for your property based on real-time and historical data and on a daily basis. Importantly, the software is programmed to fix prices during low seasons to a pre-determined level, so it is still profitable. But the real surprise is the discovery of the high demand, maximum revenue opportunities that have stunned owners.

How Are The Prices Determined?

We work with a team of data scientists and revenue management experts who utilize a variety of data sources to ensure our pricing is ahead of the competition. They don’t rely on arbitrary city boundaries or postal codes – rather they rely on machine learning combined with the human element from a team of analysts to determine comparisons/demand activity.

We start by setting a Base Price that the algorithm floats off of, which varies according to season and historic demand. The algorithm also takes into account events and holidays specific to the location, and the Vacation Perfect traveler, and increases prices accordingly.

Dynamic pricing is incredibly versatile and the Base Price is also how we incorporate the unique elements of your property and price appropriately.

Will You Lose Control Of Your Prices?

Absolutely not.
This is a common concern among owners new to dynamic pricing, and rightfully so. Prices can appear to be all over the board since demand changes daily.

We retain complete control over the pricing. We set the minimum price we are willing to accept and can adjust this based on seasonality. While we don’t recommend it, we can also set a maximum price (you’d be surprised at the rates we’ve been seeing!). We adjust prices for gaps of availability between bookings to give the property the best chance of getting booked at the best price.

While the algorithm works best with flexibility – we can still work with you to decide what you’re comfortable with and build a strategy around your needs.

What Changes Can You Expect To See?

When the pricing strategy changes, so will the typical rates and patterns you’re used to seeing.

Note that booking windows may change. If you are used to getting bookings far out in the future, you may notice a decline in these reservations. No need to panic – typically the lowest priced properties get booked first. We are simply priced appropriately for the further out dates and take the booking window into account when the price is set.

Rates can fluctuate daily which is absolutely expected and is an essential part of the strategy. Each day has different demand and is therefore priced differently.

We think you will be pleasantly surprised by the increased income, and please don’t hesitate to email us with any questions.

 

Questions? Email: Reservations@ParisPerfect.com