What is Short-Term Rental Dynamic Pricing? 

What is Short-Term Rental Dynamic Pricing? 

One of the main deciding criteria for visitors when evaluating short-term rental properties is price. It’s crucial to establish competitive pricing in your market as a result.

If your prices are excessively expensive, you run the danger of obtaining fewer reservations and you’ll raise the bar for the facilities and services your visitors demand. Negative reviews may result if they aren’t met, which might lead to unpleasant encounters.

What does vacation rental dynamic pricing entail?

Algorithms are used in dynamic pricing to continuously compute and modify prices. You may adjust your rates using this pricing approach to maximize bookings and profit margins.

The lodging sector has been using this tactic for years. It makes use of technology and machine learning to change the nightly rates you charge by supply and demand. Imagine it as your revenue-boosting magician who is always at work.

How do you decide on your nightly rate then? To determine your base pricing, you must first assess several factors. Among these are your operating costs, the prices of your rivals, or the peak travel times in your area. Once this first analysis step is complete, you will be able to apply any dynamic changes you feel are necessary to create your pricing schedule.

On the other side, setting your rental prices too low is also not a good idea. Although you may get more reservations in the near term, your revenues will be reduced over time.

The secret is to locate the sweet spot: pricing that will appeal to prospective customers while both covering your expenditures and generating a profit. It is not, however, a simple process. Seasons, adjacent events, competition, duration of stay, and many other factors need to be taken into account. By using dynamic pricing for short-term rentals, you can maintain your competitiveness year-round while still earning money.

The same goes for your ability to change with the times. This will be crucial. Events beyond our control can cause demand to increase or decrease, as we saw during the COVID epidemic in 2020 when demand for vacation rentals in certain places increased as travelers avoided hotels in favor of locations that provided more space and privacy.

You may make the most of your vacation rental company if you have the flexibility to adjust your short-term rental pricing and respond to the scenario.

What distinguishes revenue management from dynamic pricing?

Although dynamic pricing is one of the various revenue management solutions, the terms are not always interchangeable. Both ideas take into account the fact that your prices might change depending on several established guidelines and mainly rely on data and technology to anticipate what the ideal pricing should be.

Dynamic pricing and revenue management, however, are not the same as discount methods since they raise prices, especially if there is a rise in demand.

Dynamic pricing for vacation rentals: advantages

Your Entire Income Will Rise

With dynamic pricing, you may change your nightly rate to maximize your total income over time. For instance, if your calendar indicates that many guests are planning 3-day weekends, you may lower costs on Wednesday to promote longer stays.

When you adjust your prices in this manner, you will see a shift in income over time since these minor price adjustments add up to a sizable number, which will probably increase your earnings over time.

Saving Time

Using short-term rental pricing tools to optimize your rates eliminates the guesswork involved in determining which rates to charge when.

You risk losing reservations if your pricing is too high, and you lose money if you undercharge. This issue will be resolved, and you’ll save countless hours of labor thanks to dynamic pricing.

Increase occupancy and stay time

By using approaches for a dynamic minimum stay, smart pricing enables you to both accomplish longer stays, and better fill the gaps between bookings. Dynamic pricing for short-term rentals enables you to get as many reservations as you can at the greatest prices.

When vacation rental owners and property managers employ dynamic pricing, occupancy rates become more steady, and their income streams are more secure.

Perform better than your rivals

If your rivals are not utilizing dynamic pricing and are instead attempting to determine their rates via guesswork, inflation, and in-depth competition study, you have a clear edge.

Critical data will give you a better understanding of every facet of your company and give your listing an advantage over rival listings.

What are the best tools for pricing vacation rentals?

Your price rules don’t necessarily need to be put up manually. There is a much simpler method. You can automate everything with dynamic pricing software for vacation rentals. Professionals who manage vacation rentals may implement rules to control price and nightly stay limitations using these tools, saving them hours.

Some of the most significant tools for determining vacation rental prices are listed below:

Beyond Pricing

Beyond provides a dynamic, demand-driven pricing mechanism that links with OTA distributors like Airbnb, Vrbo, and their booking engine and includes substantial market data.

They now have 340,000 postings available in over 7,500 places throughout the globe.

Additionally, Beyond and Lodgify have joined to provide short-term rental managers and owners who use this vacation rental software with ways to generate, increase, and maintain income.

To optimize income and occupancy, their data-driven application automatically modifies rates. Through their local market specialists, the tool may also assist you in maximizing your profits and forecasting income.


Another simple-to-use pricing tool that may assist property managers and owners of vacation rentals enhance income and occupancy are Pricelabs.

PriceLabs’ data-driven strategy increases vacation rental income and saves owners time when controlling their prices by using predictive analytics and machine learning. The tool has no regional restrictions and is accessible worldwide.

Market data is layered with customization options to offer you complete control over your pricing approach.

Smart Pricing on Airbnb

Additionally, Airbnb has its own automated dynamic pricing algorithm. You may automatically adjust the price of your home depending on the demand for listings that are comparable to yours using this built-in function inside the Airbnb calendar.

The software considers more than 70 variables, including the date of check-in, market demand, seasonality, listing ratings, and the services provided. Even the frequency of daily visits to your listing and the length of time people stay on your page are valued by Airbnb. Additionally, Airbnb lets you choose a minimum and maximum nightly rate, ensuring that hosts always maintain financial control. You may decide whether to enable or disable Airbnb Smart Pricing. Even with this option chosen, you may still modify some nightly pricing and fluctuation restrictions at any moment in your calendar.

Your Airbnb administration software is directly connected to dynamic pricing software. The tools will examine your pricing and make any required change suggestions after synchronizing your accounts. Your calendar will reflect them when you approve (or alter) them.

How are dynamic prices determined using STR pricing tools?

Dynamic pricing tools for short-term rentals will start with your average base rate. Your basic fee will be $200 if your average nightly rate is $300 in peak season and $100 in low season. Although each tool determines costs differently, they all generally take the following things into account:

  • Seasonality: The resources modify your basic pricing by the time of year. They examine historical patterns in local hotels and vacation rentals to achieve this.
  • Days of the week: They choose whether to raise or decrease the price of lodging in your location, dependent on the day of the week.
  • Lead-time: This term describes the interval between the time a user books your rental and their check-in date. Using this information, dynamic pricing technologies may provide discounts for both last-minute bookings (to fill in the blanks on your schedule) and prior reservations (to guarantee the maximum possible occupancy).
  • Vacation days and significant occasions: These tools will identify the most sought-after dates after examining the activity of your regional rivals. To lower the margin of error, you may also provide a list of the major events in your region.
  • Nothing is worse than having voids amid an active schedule than “orphan” days. Because of this, some technologies will automatically produce discounts to encourage booking these “orphan days.”
  • Personalization: The choice of approach is ultimately up to the owners and management. As a result, you may set a pricing range that the tools will always abide by, including a minimum and maximum.

Should you begin using technologies for dynamic pricing?

Thanks to short-term rental pricing systems that utilize cutting-edge algorithms to build a fluid pricing system that matches market demand in real-time, fixed rates are becoming a thing of the past in the vacation rental business. Should your vacation rental firm use dynamic pricing? It depends.

You may become much more competitive and boost your earnings by changing your prices in response to supply and demand or seasonality. However, monitor the costs carefully and determine if it adjusts to your management style.

Leave a Comment

Grow Your Vacation Rental Business!

No matter the size of your vacation rental business, you can benefit from Lodgable's state-of-art software. Click below to get started!

Related Articles

Let’s Get Started

Lodgable now offers the fastest response times in the industry during business hours. Learn more about how our state-of-the-art software will help grow your business today!

Grow Your Vacation Rental Business! 

Chat With Us

Chat Now




The Product