To put it simply, dynamic pricing is a strategy in which product pricing continually adjusts in response to real-time supply and demand. Without proper guidance, your Airbnb listing could be massively under priced or overpriced in off-peak seasons.
The Strategy of Dynamic Pricing
Here at JZ Vacation Rentals, we leverage proprietary software systems to automatically adjust nightly pricing rates based on the dynamic situation, season, or demand. This strategy within JZ’s Airbnb Management Services is known as “dynamic pricing”. We have also seen it referred to as surge pricing, demand pricing, time-based pricing or revenue management.
An example of dynamic pricing that one might be familiar with is Uber surge pricing. When demand of an Uber is high in a specific area at a specific time, the cost of the Uber is surcharged to a higher rate. Our team was just in New Orleans for the Vacation Rental Management Association Conference and when we took an Uber to the airport, the cost was 2x the normal rate because the supply was low and demand was high at the time. The vacation rental industry’s dynamic pricing is similar because we adjust pricing based on the demand. For our industry, we analyze the booking window in each city. For example, St. Louis’ average booking window is 40 days out. This means that the majority of people visiting this awesome city are typically booking their homes 40 days prior to their trip. We use that information as a factor when cross referencing pricing with seasonality when adjusting prices.
That’s a high level overview of dynamic pricing and how we use it in the vacation rental industry in order to increase revenue. To learn more about how to increase your vacation rental revenue or Airbnb occupancy, check out our other blogs here: www.jzvacationrentals.com/blog
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