How to determine the price of a vacation rental?

Sometimes it will be difficult to establish a budget holiday as long as the owners are inexperienced. There are some techniques that can set the price of home rentals.

Why learn to calculate the real cost?

The various pricing strategies that calculate the actual cost of bookings have a very strong impact on the profitability of an owner when he decides to rent furnished. Many holiday rental owners have outdated and ineffective pricing strategies, but they have no idea of the money and profitability they are losing as a result. Most of them charge less than the market average and they are happy to get bookings and fill their calendars. Others charge far too much for their market, confident that their high prices will increase the bottom line as they actually lose valuable bookings since the start of renting their furnished tourism. Don’t forget that you can have an estimate on prices online by looking into house and apartment rates at for-sale and other similar rental websites…

Different pricing strategies

The single tariff is a strategy for the whole year. The price is constant throughout the high season, the low season, and any period between the two. This is the most basic approach to the vacation rental cost and a few minutes are enough to set it up. What happens with this flat rate is the owner only gets reservations during peak season. Prices are too high the rest of the year. Then, it is possible to have two annual rates. This double rate strategy is a bit more complicated. Compared to a flat rate, setting two different rates increases the chances of getting bookings in the high season as well as in the mid-season and in periods of low demand.

How to estimate profitability if you’re the owner?

When looking for a vacation rental, the three most important criteria for travelers are the location of the property, the pictures of the ad and the price. In fact, travelers have very often a travel budget to respect, and in order to get as close as possible to their ideal quality / price, it is necessary to consider certain points. The owner must know his break-even point. This threshold corresponds to the minimum activity level from which the lease becomes profitable. Then, to estimate the price of the rental of his property, he must differentiate high season and low season. Secondly, it is important that he aligns himself with the prices of surrounding properties similar to his own in order to be as competitive as possible. This will allow him to get a first idea of the price range in which he must be and  to estimate his apartment more easily.

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