Maximizing Returns on STRs: Leveraging Seasonal Pricing Strategies with PriceLabs

[Alberto Nikodimov]

One of the most thrilling aspects of this industry is the opportunity to optimize pricing strategies to maximize revenue from each property we manage.

My absolute favorite part of my job is controlling the pricing of the vacation homes we manage and squeezing the maximum revenue from each home. I have been in the industry for about 7 years now, and I have tried a lot of different pricing software. In the beginning, we also handled this manually, but currently, I have settled on using PriceLabs and doing a lot of manual input and monitoring on a daily basis.

With that being said, I have discovered that to be successful and get the absolute best revenue from each home, you need to adopt different strategies for different seasons. We are currently trying to book high-season months 2-4 weeks prior to check-in because we see the highest rates this way. On the other hand, in the low season, we try to book 3+ months in advance since if you wait until the last minute, you will either book for a very low price, since all other hosts drop their prices then, or you will not book the home at all and have very low occupancy rates.

There are two ways to do this on PriceLabs. The first one is to just trust the algorithm and let it set your prices; the second way is to have a different base price and settings for the low season. In my opinion, the second option is a better approach. Where I'm currently struggling is having to adjust a lot of things manually, which I don't mind, but as we scale, this will become more and more challenging.

Here are the highlights of what we do when it comes to pricing:

1. 1. We carefully select our base price after looking at comparable properties, neighborhood data, data from previous years, and, of course, considering the condition and quality of the home.
2. 2. PriceLabs is pretty good at adjusting to our season, but I believe it works even better when you adjust pricing and minimum stays, especially when it comes to mid-season months, very high, or very low season.
3. 3. We select a list of top 10 competitors in the neighborhood and monitor their pricing closely, adjusting our pricing to theirs after considering reviews, condition of the home, occupancy, etc.
4. 4. We encourage longer stays in low season and shorter stays in the high season by adjusting our minimum stays.
5. 5. We look into the pricing from the previous year and adjust next year's pricing by increasing the rates by 10%.
6. 6. When setting our pricing, we look at homes with the exact same number of bedrooms and competitors in the same price range. I believe this is very important since if a guest can afford a 5-bedroom pool home in the same neighborhood as your 3-bedroom home with a pool, most likely, the 5-bedroom home will book first.

This is why I am reaching out for advice. My favorite part about the Short Term Rental community is how cooperative we are and how we always strive to become better. I would truly appreciate your feedback, suggestions, and advice. I am open to different approaches. We always try new things, but these are the methods that have worked for us in the past.

What is your approach regardless of the pricing software you use?

Are you happy with the regular base algorithm, or do you make a lot of adjustments and changes?

Do you adjust your minimum stay depending on the season?

[Brooklyn McCarty]

Yes I do adjust my min stay based on how far out the booking occurs, this is a feature in PL. 

PL or any pricing software is not going to be set it and forget it, you still need to be in there weekly or 2x a week adjusting and making sure everything is going smooth until you find your goldilocks pricing. 

PL has a awesome comp set where you can see what others in your area are doing. It's like the enemy method on steroids.