Pricing strategies are complicated subjects! We wanted to jump into our Airbnb pricing strategies and help you decide which strategy is right for you!
At DPGO, our users can choose between four Airbnb pricing strategies: More Aggressive, More Conservative, Recommended, and Custom.
What is the Difference Between the Airbnb Pricing Strategies Offered by DPGO?
In this section, we’re going to examine what makes each strategy different. Puls, what the similarities and disparities are between them.
Let’s start with…
The More Aggressive Airbnb pricing strategy is aimed at increasing your revenue. Every setting, figure and feature is optimized to get the highest prices for every booked date in your calendar. When using this strategy, the DPGO algorithm will source and analyze the appropriate data to ensure that your prices are as high as possible, while still working within your pricing framework and staying competitive.
The More Conservative Airbnb pricing strategy is aimed at increasing your occupancy rates. All of the settings on your DPGO interface will be optimized to ensure you secure a booking. This aims to increase your overall occupancy rate. Like every other strategy available on DPGO, the algorithm will work within the pricing limits that you set to ensure that you never have to honor a booking for a price lower than that of your break-even point.
With all of the data collection and analysis that our pricing tool does on a daily basis, we created the Recommended strategy to give our users the most data-driven pricing approach possible. We use everything from exchange rates to booking surges and changes in competitor prices to arrive at the best price. This ‘best price’ is created as a balance between increasing your occupancy rate and securing the highest nightly price possible.
We wanted our users to be able to design their own pricing strategy from the base up. This is exactly why we designed the DPGO interface in the fashion that we did. At every possible step of the set-up process, DPGO users can choose the ‘Custom’ strategy and enter their own values. We designed the process to feature this ability because we wanted users to be able to create their own strategy and make changes if they identify that part of it is not working. Of course, we’re here every step of the way to make sure that your custom-designed Airbnb pricing strategy works like a dream.
Which One of the Airbnb Pricing Strategies is Right for Me?
Your choice of pricing strategies really depends on your business goals and how well you think you know your local market. All of the advice and insight that we offer comes from data. We make no assumptions and never offer a solution unless it is backed up by corresponding data proof.
If your aim is to make as much money as possible, then the More Aggressive strategy is best.
Maybe your aim is to have higher occupancy, then the More Conservative Airbnb pricing strategy is better for you.
If you want a balance of higher occupancy rates and maximized revenue, then the Recommended strategy should be your first choice.
Finally, if you think that you have a good understanding of your listing and the market in which it exists, then try your hand with the Custom strategy. Just be sure to check back every two weeks or so to make sure that you can correct any potential flaws in your pricing strategy before you leave money on the table!
Can I Change My Strategy?
Interestingly, we decided not to set our strategies as holistic throughout your pricing strategy. Instead, our users can choose More Aggressive, More Conservative, Recommended, or Custom at every stage of your set-up process. You can choose your strategy for the following input values:
You can alter these choices at any time. The DPGO pricing algorithm will then update your prices accordingly.
How Will I Know if My Strategy is Working?
We’ve developed a great way to show you how well your listing is performing in the market. Our Health Score display shows you your current Health Score, as well as scores in the past and the scores of your competitors in the area.
If your Health Score stays the same, or even decreases after you select ‘Custom’ and set your own pricing values and principles, then you’ll know that your settings are not working to optimize your listing.
How Do I Sign Up to DPGO?
To sign up for your free trial, simply visit www.dpgo.com. All you need to do is create an account, link it to your Airbnb profile, and boom – you’re on your way to better Airbnb pricing!
The leap to dynamic pricing can feel intimidating, but we’re here to show you that using DPGO is as easy-as-pie and by far the best decision you can make for your short-term rental business.
If you’re not using the right pricing tool, turning on dynamic pricing can sometimes feel like you’re giving away control of your listing, but nothing could be further from the truth when you’re using DPGO. We designed DPGO as an optimization tool. We work for you to make your property listing the most profitable it can be.
Our pricing tool is incredibly detailed. We want our users to feel 100% in control of their listing. We can’t automate your pricing without you first setting up the ins and outs of your pricing strategy. Of course, we will help you decide on a pricing strategy, but we need some information from you first. These input values that we ask you to specify give us a pricing framework within which to work.
We know that it can seem scary, but that is what this guide is for – to show you that you are in control of your listing at every stage of the dynamic pricing process. Nothing happens to your prices without you first completing the set-up process. DPGO is a tool for business optimization, not business hijacking.
With that said, let’s dive straight into the DPGO registration process.
How Do I Register for DPGO?
Step One: Go to Our Website
Visit www.dpgo.com and click the blue “SIGN UP FOR FREE” button in the top right-hand corner. If you clicked on a Registration link from one of our social media posts, blog posts, or emails, you’ll be taken straight to the registration page.
Step Two: Enter Your Details
Step Three: Connect Your Airbnb Account
After you click “SIGN UP”, you’ll be taken to the Connect to Airbnb page. Here, you’ll need to enter your Airbnb login details and allow DPGO to import your property listing specifics. DPGO needs access to these details to create our dynamic pricing recommendations.
We gain access to Airbnb in read-only mode, and we never store your security-sensitive information like passwords. We are only permitted to make certain Airbnb-authorized changes, like updating your minimum stay requirements. If you have more questions about how DPGO accesses your Airbnb account, please feel free to reach out to our support team and they will answer any questions that you might have! You can reach them at firstname.lastname@example.org.
Please Note: If you do not have a unique password for Airbnb because you signed up for Airbnb with Facebook or Gmail, you will first need to create an individual password for your Airbnb account. You cannot connect to DPGO without having a password specifically for your Airbnb account. Click here to visit the Airbnb help page.
Step Four: Airbnb Approval
As you’re granting DPGO, a third party, access to your account, Airbnb may need to verify your identity for safety reasons. This discretionary step ensures that you’re kept secure and that Airbnb will allow your connection with DPGO to go ahead. Depending on your account, Airbnb may send you a verification code (either by email or text, depending on which you select) and all you need to do is enter the code that Airbnb sends you, and the connection can get started!
Step Five: Wait for Connection
DPGO will then establish a connection with your Airbnb account. Please be patient and do not close your connection window. If you run into any issues, please feel free to send an email to email@example.com and we’ll be on hand to help!
It doesn’t take long for DPGO to connect with your Airbnb account but it’s important that you stay on the page and do not refresh your browser window.
Please Note: You may also receive an email from Airbnb alerting you to a new sign-in session. This is totally normal and nothing at all to worry about. Please do not change your Airbnb password. If you do, your connection with DPGO will expire and you will have to go through the set-up process once again.
Step Six: Set-Up Completed!
Now your Airbnb account is connected to DPGO, you’ll be presented with our recommendations for your dynamic pricing strategy.
In the next section, we’ll walk you through every settings tab and show you how to make the most out of DPGO!
How Do I Make Changes to My Dynamic Pricing Settings?
The “Prices” subheading menu allows users to enter their desired Base Price, plus a figure for maximum and minimum pricing limits. The vast majority of our users opt to enter both a Base Price and a minimum price, but not a maximum price.
Your Base Price forms the foundation of your pricing strategy. We give you four options: you can choose one from our three recommendations (Conservative, Recommended, or Aggressive), or you can enter your own number for a ‘Custom’ strategy.
The ‘Conservative’ strategy is aimed at keeping your occupancy at a steady and reliable rate. The ‘Aggressive’ strategy is designed to get you as much revenue as possible. The ‘Recommended’ strategy is a balance of the two.
Setting a minimum price ensures that our pricing engine never sets your rates lower than that number. This figure should cover your costs and include a buffer, which you can decide for yourself. We do not offer recommendations for either minimum or maximum price. When you add a minimum price, we would recommend watching the average nightly rate for your area. If your minimum rate exceeds the average, there is a possibility that your listings won’t get the same exposure on Airbnb and this will result in a lower occupancy rate.
Having a strategy for minimum stays can make the difference between a profitable Airbnb listing and one that costs more than it makes. Accepting single night bookings means higher cleaning costs, and quite frankly, more work.
The Minimum Stay menu tab allows you to enter a global minimum night stay requirement and allows you to select whether or not you want to allow gap night stays. The Gap Night function works only for those gaps in your calendar that cannot be sold as one booking because of the minimum night stay requirements. In this case, the algorithm reduces the requirements for the gap to be sold as a complete package. If you do not want to allow single-night stays, simply disable this setting.
We wanted our users to experience the pinnacle in Airbnb management technology, so we designed a range of features including our day-of-the-week minimum stay capabilities. This menu allows you to set minimum stay requirements according to the day of the week on which the booking starts. Most of our users opt to set higher minimum night stays for weekends. Often our users set their weekends to have a 2-night minimum in order to ensure their entire weekend is booked.
You can also set date-specific and time-sensitive requirements in regards to the length of stay. The time-sensitive minimum stay settings allow you to create rules to automatically adjust the minimum stay requirements based on the number of days that will elapse between the booking date and check-in. Date-based minimum night stays allow you to manage different requirements across different periods. For example, most hosts opt to set a higher minimum night stay requirement over Christmas and New Year, or during school holidays.
On our Discounts tab, users can set both last-minute and long-term discounts. For last-minute discounts, we offer the standard four DPGO strategies: Conservative, Aggressive, Custom, and Recommended. If you select ‘Custom’, you can enter the percentage discount that you’d like to offer. You will also need to enter the number of days before check-in that the discount will be valid.
We see plenty of variation in these numbers, but if you’re not very familiar with offering discounts, try the ‘Recommended’ strategy and review your listing’s performance after a month or so.
We’ve divided long-term discounts into sections: weekly, monthly, and custom. With DPGO, you can decide on the percentage discount that you’d like to offer for bookings over 7 and 28 days. You can also set custom discounts for custom lengths of time. Make sure you review their effectiveness after a month and make some changes if you’re not happy with the performance.
We thought long and hard about how we can streamline our user’s weekend pricing strategies. Friday, Saturday, and Sunday are critical opportunities to increase your Airbnb profitability.
Again, you can choose from four strategies: Conservative, Aggressive, Custom, and Recommended. If you chose ‘Custom’, you’ll be able to input your own percentage increase for weekend bookings. Please note that your ‘Custom’ percentage is not static. If the recommended percentage shifts, your custom percentage will change too.
Short-term rentals, no matter where in the world they are located, have peak and off-peak business seasons. Our ‘Seasonality’ settings allow our users to adjust their pricing strategies according to the month of the year.
Our recommendations are based on historical booking trends in your area as well as data-driven forecasts for what we think the market will do during your next peak season. We’re sure you’ve come to realize by now that we will always allow you to input your own values and design your own strategy when we can. And our ‘Seasonality’ settings are no exception.
Users are also able to manually alter their monthly seasonal adjustments with our helpful monthly slider menu. These seasonal adjustments are relative to your Base Price, so if you update your Base Price, your seasonal adjustments will also change.
Set Your Property Nickname
For ease of reference, we recommend using our nickname function to help track your listings more efficiently than ever!
Your Airbnb pricing strategy is key to your eventual success. You need a clear strategy for managing your revenue and pricing decisions throughout the entire year. Airbnb listings can be tricky to price when you don’t have access to detailed market data. And it gets even trickier when you start to deduct the Airbnb hosting costs.
There have been rumors for years about Airbnb moving over to a mandatory host-only service fee structure. Obviously, this will affect both the booking rate and pricing of your Airbnb rental. If you own a vacation rental, how are you supposed to alter your Airbnb pricing strategy to keep earning optimized revenue? Well, if you’re in the Airbnb business, then keep reading!
Airbnb hosts face a near-constant battle to find the ideal nightly rate to attract bookings. Within that rate, hosts need to consider base prices, break-even costs, Airbnb fees, additional fees, and security deposits (if they so wish). When Airbnb changes the fee structure, hosts will have to recalibrate their pricing models. If they don’t, they’ll lose out on valuable income.
What is an Airbnb Pricing Strategy?
In short, an Airbnb pricing strategy is the approach you take to determining the daily rate of your Airbnb property listing. Some hosts want higher occupancy rates so they lower their prices to attract more bookings. Some hosts want to make as much money as possible, so they charge higher rates to maximize their earnings.
The approach you take to pricing your Airbnb listing is completely your choice. But it is inherently linked to your business goals. Of course, money is the main goal, but would you rather go for quantity or bookings or quality of rates?
Your short-term rental pricing needs to be optimized to extract as much revenue from every booking as possible. Using a dynamic pricing tool makes this process easier, but you will still need to determine your business goals.
How are Airbnb Fees Currently Structured?
Airbnb currently offers two fee models: Split-fee and Host-only. The vast majority of hosts choose the split-fee option. This means that Airbnb charges the host 3% of the booking value. The guest pays anything under 14.2% of the booking value (including cleaning fee and any additional guest fee). Airbnb Plus hosts and those with Super Strict cancellation policies may pay more than the standard 3%.
Host-only fees mean that guests simply pay the nightly rate, plus the cleaning fee and any additional fees that the host elects to charge (like extra guest charges or pet fees). Ordinarily, these fees range between 14% and 16%.
When determining daily rates, hosts will need to account for these Airbnb charges. And this gives rise to the question – how can I keep my prices optimized when Airbnb takes between 14% and 16% of the booking value?
How Can Dynamic Pricing Help?
Dynamic pricing works to optimize your revenue. It finds the best and most attractive price in that given market environment in order to secure a booking.
We created DPGO to be the most advanced dynamic pricing tool in the market. By including AI, machine learning, and yield management, we ensured that our software was constantly learning and improving its smart pricing recommendations. Pricing algorithms are complicated, but we knew exactly the type of insights that Airbnb hosts need to optimize their earnings. So, we made sure that DPGO had them!
The DPGO interface allows users to input a range of values that form the basis of their pricing strategy. Without this pricing framework, dynamic pricing cannot be enabled. Starting with Base Price, users are given the option to enter a custom price or select one of our recommendations. We have three recommendations and they are Conservative, Recommended, and Aggressive. While your Base Price is just one value, it represents a dynamic set of demand-driven rate variations.
Users can also opt to input their minimum and maximum price which will guide our pricing of your rental property. This is where host-only fee structures come in. By determining the minimum price that you can accept while still making a profit and entering that value into the DPGO interface, you will ensure that securing a booking will never cost you money.
Even though DPGO offers price tips for last-minute discounts, seasonality adjustments, longer stays, and day of the week price changes, our software will never set your prices lower than your stipulated minimum price.
How Will the Market React?
As fees are calculated as a percentage, there is no way of knowing the exact amount ahead of time. DPGO was designed to get as much as possible from each and every nightly price. This means that no matter your free structure, we’re here to help you earn more money!
If Airbnb does change to a host-only fee structure, what do you think hosts who do not use dynamic pricing will do? They will raise their prices. DPGO will then observe this mass-market shift, and adjust yours accordingly. You won’t have to do anything at all! This is the beauty of dynamic pricing. So even if Airbnb does make this drastic change at some point, DPGO dynamic pricing will continue to save you time and earn you more money!
If you’d like to experience the kinds of insights that we offer and see the change in your business for yourself, click here to start your free trial! We’re giving new users the opportunity to try DPGO for free for 30 days, and you don’t need to register a credit card when you create your profile.
Believe it or not, your vacation rental pricing strategy is as important in the off-season as it is in peak season. As an Airbnb host, you should be constantly looking to maximize your short term vacation rental earnings. Smart pricing is the way to do that. According to RentingYourPlace.com, “About 60% of your potential income comes from the intrinsic value of your property, location, and amenities. The other 40% is dependent upon implementing an effective Airbnb pricing strategy.”
We wanted to take a second to examine how a clear vacation rental pricing strategy, paired with a few general listing admin changes can transform your Airbnb earnings in peak periods.
As you know, our DPGO team is made up of property managers and we specialize in dynamic pricing. Let’s jump straight in and start our guide on how to maximize your revenue and occupancy with smarter decision making and a clear vacation rental pricing strategy.
How to Earn More with a Clear Vacation Rental Pricing Strategy
1. Start Seasonal Pricing Early
By the end of one peak season, you should be already thinking about the next season’s pricing. Seasonal pricing depends on a whole host of factors. These include competitor pricing, market supply and demand, overall market health, and even exchange rates.
The key to pricing is preparation and research. Knowing how your prices fared the season before is critical. If your occupancy rates were low in comparison to that of your competitors, then it’s highly likely that your prices were too high. This will have scared away potential bookings, as they could secure a similar listing at a cheaper price.
If you’re a DPGO user, manually updating your prices is a thing of the past. You give us the pricing parameters, and we work within the framework that you set up. We also have a Seasonality Adjustment setting which will allow you to change your prices by season in order to maximize revenue. You can also follow the DPGO recommendations if you’re not too sure where to place your pricing. Simply enter a minimum price and a base price and leave the rest up to us! You can also enter a maximum price if you want to put a cap on what DPGO can charge for your listing.
2. Set Minimum Night Stays
Experienced Airbnb hosts will know the importance of setting minimum stays. While this isn’t explicitly part of your vacation rental pricing strategy, it does effect your revenue. Requiring a minimum number of nights for a booking will protect you from only having one and two night stays, sporadically spaced over your calendar. Most listings increase their minimum night stay requirement over peak periods as it means larger portions of their calendars are covered. They also do not need to spend large amounts of money on lceaning fees for one night bookings.
If you add in a minimum night stay, your listing is competitively priced and you are still not getting bookings, you can always relax these restrictions.
3. Be Mindful of Fees in Your Vacation Rental Pricing Strategy
Guests do not just compare your daily rate. They also look at total cost, inclduing fees. As part of your vacation rental pricing strategy, you should be using your fee structure in an optimized way.
Drastically lowering your rates and making up for it in fess is not the best way forward. Nobody wants to pay a $150 cleaning fee for a three-night stay. Your flat nightly rate is not the only number that can scare bookings away. Remember that!
4. Plan for Local Events
Aside from peak season, booking rates in your local area can increase when a big event is taking place in the vicinity. Your short-term rental revenue will benefit if you price more competitively for these busy periods.
It’s commonplace in the vacation rental industry to increase prices for periods of higher booking rates. The dates of big local events certainly qualify. Analyze what your competitors are charging, look at hotel rates for those dates, and try to position yourself to attract bookings. Interestingly, some hosts decide to block off important dates well in advance in order to better understand their competitors’ pricing. They only unblock those dates once they have a better understanding of the prices for that season.
Again, if you’re a DPGO user, then you’ll know that we take care of these pricing decisions for you. Our dynamic pricing tool allows you to optimize your vacation rental pricing strategy without skipping a beat! You won’t need to block any dates in your calendar because our dynamic pricing software uses a combination of historical market data and machine-learning predictions to find the right price for your listing up to one year in advance.
5. Last-Minute Discounts
Incorporating last-minute discounts is a great way to encourage a booking in the last few days before the desired check-in. If you lower your prices to encourage a last-minute booking, your listing will be more attractive to potential guests. There is also the added booking cancellation consideration. As these bookings are made very close to check-in, the host is protected by the majority of Airbnb’s cancellation policies.
Renters looking for the sweet spot between price, location and amenities. In the vacation rental business, how you compare to your competition is key. The market conditions need to be just right in order to secure a booking for your rental vacation home. By adding a discount to fast-approaching, unbooked dates in your calendar, vacation rental owners have the ability to increase their revenue and occupancy rates.
Wait a second, how can offering a discount help my revenue and play into a greater vacation rental pricing strategy? In the simplest of terms, any booking is better than no booking. Especially when you use DPGO and you’ve set a minimum price! Adding a minimum price means that we will never set your prices lower than the value you set. Calculate the cost of running your listing and make sure you set your minimum price no lower than that figure.
How Can DPGO Help Perfect Your Vacation Rental Pricing Strategy?
Our dynamic pricing tool analyzes market conditions in real-time to find the right price for the right guest and the exact right time. Unlike most algorithms, DPGO has the power to learn more with every pricing prediction and recommendation. We incorporated machine learning and yield management to create the most comprehensive, intelligent, and advanced pricing tool on the market today.
We understand the principles of real estate and making a success of any vacation rental property. Because we know that the vacation rental market is a tricky thing to navigate, we created DPGO! Pricing no longer needs to be the thing that you worry about at night. Our data-drive market insights will keep your prices competitive 24/7, 365 days per year.
Airbnb hosts need to stay informed of global travel trends. It’s critical to the success of their market rental property to stay informed so they can better take advantage of market fluctuations and surges.
Did you know, for example, that experts have predicted more local travel than ever in 2021? But how does this affect Airbnb hosts? What can they do to attract more bookings?
It is simply a question of optimization. You need to learn to identify the gaps in your listing’s customer appeal, fix them and market your property specifically to your target audience. You can’t control who Airbnb shows your listing to, but you can control the special touches that you include in your listing in order to better market your listing to certain guests. If your target audience is families, check out our guide on how to make your listing more family-friendly or pet-friendly.
Pricing during uncertain times can be chaotic. Choosing your pricing strategy is half the battle (one that DPGO can help you win). But how can the price of a listing be optimized to better take advantage of the annual travel trends?
Why the Price of Your Market Rental Property Matters
Pricing ultimately determines the success of your Airbnb listing. Of course, there are other considerations, like amenities and property features, but pricing can make or break your business. Not only does it attract, or repel, bookings but it also dictates your income and whether you can make your mortgage repayments.
Even in the greater real estate market, pricing is key. Renters and guests are constantly looking for the sweet spot where price, location, and amenities meet. Whether they are looking at a longer-term property for rent or an STR vacation rental, finding the right price to attract the right guests and the right time can be complicated.
Whether you’re concerned only with property management, or the greater dynamic pricing debate, knowing the market environment is key. Understanding how your competitors price their listings will help you attract more bookings than they do: if not through price, then through added-value amenities or better property features.
Following the crowd is not always the worst idea. If all of your competitors increase their prices for a weekend in June, and you can’t seem to figure out why it’s probably a good idea to increase your prices too. Having lower prices can encourage higher booking rates. But it can also mean you’re missing out on extra money. Luckily for DPGO users, they don’t need to keep that keen an eye on their pricing, because we’ve got it covered!
DPGO offers comprehensive insights into your closest competitors. We monitor increases in booking activity and greater market trends to adapt your pricing before it’s too late. Missing out on surges in the market costs you money. DPGO does not just work for single-listing owners, it works for property managers too! Our platform allows the integration of multiple listings. Managing your rental listings from there is simple!
Knowing What to Charge
This is an interesting part of the market rental property pricing discussion. Instead of simply increasing basic rates at historically busier times in your calendar, examine the possibility of altering your associated fees. Cleaning fees, security deposits, and extra person fees are all ways to increase your pricing without scaring people away with a higher basic rate.
The forecasted travel trends for 2021 have predicted that group travel is going to boom. People want to socialize but cannot do so in public and thus are electing to go on group holidays. You can use this to your pricing advantage by charging extra for the additional individuals that will be staying in your listing.
The same goes for the digital nomad trend. You can charge higher rates for higher internet speeds, for example. Individuals who work from home want internet speeds that make that process easier. This presents hosts with an opportunity to earn more. Plus, in the age of social media, who wants the pain of a slow internet connection?
We wrote a blog post earlier this month about pet policies, and this is another great way to jump on the trend bandwagon for 2021. People love traveling with their pets. Local travel is predicted to take up a large portion of the market, and allowing pets could attract higher booking rates. Be pet-friendly, and charge a security deposit. Then consider increasing your cleaning fee and you’ll be in the best position to attract prospective tenants.
Attract the Right Guests
If your listing is well suited to families, keep that in mind with your pricing. Cleaning an Airbnb listing after a single guest is easier than cleaning up after an entire family. Children can cause damage to soft furnishings and carpets in your property. We know that dogs can too, but people may not take too kindly to you requiring an extra $100 deposit to allow their infant to stay.
Tailoring your prices to your target demographics is key to optimizing your income. Listing with high-end finishings and additional extras like fire pits and wine fridges can charge more because of the luxurious nature of the property. Bigger listings can charge more because they accommodate more people with a higher number of bedrooms. Listings in central locations can charge more simply because they are located “right in the action”. You can also charge more if your rental is close to grocery stores and other amenities.
Find the unique selling point of your property, make it the focal point of your listing on Airbnb and adjust your prices accordingly.
Your pricing should react to market trends before you even notice them. This is where DPGO comes in. Our AI-driven pricing tool is so advanced that you no longer need to worry about pricing! Our complex data collection and analysis processes mean that we’ll adjust your prices for you on a daily basis. What is the end result? Well, higher booking rates and better income rates! Win-win, right?
DPGO was founded by a group of experienced Airbnb hosts and real estate investors. We know everything there is to know about the short term vacation rental market, and we hired the best big data engineers to design our pricing tool. We can help you optimize the pricing of your property listing by reaching your target market with dynamic pricing.
Sign up for your free DPGO trial now! You don’t need to register a credit card when you sign up. You can also cancel your profile at any time, with no costs at all! Register at www.dpgo.com and get started!
Determining your vacation rental pricing without dynamic pricing software is a complicated task. Pricing tools use a whole host of complex approaches to data collection, analysis, and interpretation which brings together various pricing techniques.
DPGO makes use of machine learning. In this post, we’re going to go into more detail on why we use machine learning. We’ll also discuss what exactly it is and why you should care about what it does.
Machine learning falls under the umbrella term of ‘Artificial intelligence’, so first, we need to define AI and explain how technology makes use of it.
What is Artificial Intelligence?
Artificial Intelligence, or AI, as it is commonly known, is the type of intelligence displayed by machines. And, for reference, both humans and animals exhibit ‘natural’ intelligence.
When it comes to developing technology, AI plays an important role. According to BuiltIn, “Artificial intelligence (AI) is a wide-ranging branch of computer science concerned with building smart machines capable of performing tasks that typically require human intelligence. AI is an interdisciplinary science with multiple approaches, but advancements in machine learning and deep learning are creating a paradigm shift in virtually every sector of the tech industry.”
How Does AI Function in Vacation Rental Pricing Technology?
According to SAS.com, “AI works by combining large amounts of data with fast, iterative processing and intelligent algorithms, allowing the software to learn automatically from patterns or features in the data. AI is a broad field of study that includes many theories, methods, and technologies. So, in summary, the goal of AI is to provide software that can reason with input and explain with output. Thus, AI will provide human-like interactions with software and offer decision support for specific tasks.”
Fundamentally, AI is utilized by technology firms to optimize the processing of large amounts of data.
Let’s learn more about how machine learning informs vacation rental pricing software!
What is Machine Learning?
There are a few definitions of machine learning as it is a complicated subject. We define it as the process which allows our pricing algorithm to learn more with every prediction that it makes. Often, machine learning is seen as an aspect of artificial intelligence because it allows a program to improve through experience.
Why Do We Use Machine Learning?
We designed DPGO to be the most advanced dynamic pricing tool for vacation rental pricing on the market. So, in order to make that happen, we knew we needed our pricing tool to constantly learn and improve.
What Does Machine Learning Do?
Machine learning allows our pricing tool to detect changes in activity and works to predict further trends and surges in market demand. It works on a simple premise – the larger the amount of data, the more in-depth the learning process, and the more accurate the result will be. It means that over time, machine learning software will continuously improve its pricing recommendations.
Machine learning means that software does not need a programmer to explicitly program software to perform certain tasks based on certain data-dictated lessons. Instead, it means that the software has the power to learn said data-driven lessons on its own.
Want to check out a few more of our posts? Learn how to improve your revenue management with our dedicated guide here. Ever wondered how to attract more family bookings? Well, we outlined a few small changes that you can make to attract bookings from larger family groups. The Airbnb IPO debacle is confusing, check out our explanation post here. While you’re here, why not also check out a few more recent blog posts? We explain why DPGO is the perfect dynamic pricing tool for property managers here. And here we discover whether being a Superhost really increases revenue or not!
Revenue management – it’s more complicated than it sounds. When an Airbnb host examines their balance sheet at the end of the month, they’re too often faced with poor financial returns.
In this post, we’ll examine how you can improve your Airbnb revenue management skills.
What is Revenue Management?
In this context, revenue management is not actually the management of your business revenue. Confusing, right? In the hospitality industry, revenue management is more about predicting customer behavior. Similar to yield management, revenue management involves finding the right listing, for the right client, at the right time, for the right price.
Revenue management requires the application of detailed analytics in order to optimize product availability and price to maximize general revenue growth. These analytics serve to better predict customer and market behavior to optimize sales and associated revenue. This approach can spark business growth, which is sustained over a longer period of time.
How Does Revenue Management Apply to Airbnb?
Airbnb may not function as a traditional hotel business structure, but it does demand price optimization. Airbnb users choose Airbnb over traditional hotel structures because they see the inherent value in the organization, and in the experience that it sells. This gives hosts a niche in which to operate.
Any business can benefit from a decided revenue management strategy. It by no means only applies to businesses in the hospitality industry.
Airbnb hosts need to understand revenue management and learn how to use it to their advantage. How does a regular Airbnb host gain access to the kind of insights that they need in order to perfect their revenue management strategy?
Steps to Better Revenue Management
Step 1: Optimize with Dynamic Pricing
The first step for any aspiring revenue manager is to optimize prices with a dynamic pricing tool. There are plenty on the market, but none are more comprehensive than DPGO.
We offer our users in-depth insights into their local market. These insights include competitor data, market trends, booking rates, average price, the average length of stay, and more.
As Big Data experts, we specialize in the collection and analysis of data. This helps us create incredibly accurate pricing strategies. By using the data we collect in a certain way, we’ve managed to work aspects of Yield Management into our pricing tool. Our users benefit from this enormously, as we are able to predict what their target audience will do.
We also automatically update your prices on a daily basis to make sure that you never miss out on valuable income or a booking of any kind. This ensures that your listings are always kept in line with market booking trends, which leads to higher booking rates and generated income.
In order to better your revenue management, using dynamic pricing will enable you to optimize prices for the trends in your local market. This is the first step in reaching the ideal revenue management strategy.
Step 2: Be Clear on Cost and Offer Discounts
As of November 2020, Airbnb now makes it much easier for hosts to view the end price that their customers will be paying. In Airbnb’s own words, “we haven’t made it easy enough for hosts to find the guest fee.” This ambiguity made it difficult for hosts to see what their guest’s total price was, and therefore couldn’t market their listing efficiently.
Now that Airbnb has removed these hurdles, hosts can now focus on revenue management and optimize it by offering discounts, as they now feel comfortable enough to do so.
Discounts are a great way to encourage business and when used strategically, can make your prices look irresistible to Airbnb users.
The best thing about offering discounts on Airbnb is that the majority of them qualify for their merchandising options. With the exception of last-minute promotions, all other Airbnb discounts qualify for these special merchandising tags. If you offer a discount, your listing will be marked with a tag. These tags say “good price” or “new lower price” to attract more visitors to your listing profile.
Revenue management is all about optimizing your understanding of your ideal customer profile and adapting your pricing structure to suit that profile. Offering discounts allow you to attract customers to your listing without losing out on money. After all, a discounted booking is better than no booking at all.
DPGO users can also make use of a very helpful feature: Pricing. We allow users to choose their own discounts policy. We also allow them to enter pricing limits. This ensures that the price of their Airbnb listing never strays from within their pricing framework.
DPGO Pricing Strategies
DPGO users can set discounts with ease via the Discounts tab in their Dynamic Pricing Setting menu. For last-minute discounts, you can choose between four strategy options:
Recommended – Drop prices within 14 days of check-in by a market trend determined percentage.
Aggressive – Drop prices within 7 days of check-in by a market trend determined percentage.
Conservative – Drop prices within 21 days of check-in by a market trend determined percentage.
Custom – You determine the percentage discount, and the number of days before check-in that you want to offer this discount.
Users can also set Long-Term discounts. There is an opportunity to enter your desired discount percentage for both weekly and monthly stays.
Step 3: Offer Non-Refundable Pricing
In October of 2019, Airbnb launched a pilot program to check the effectiveness of an optional cancellation policy add-on. Instead of selecting a Strict cancellation policy, hosts can now choose Flexible or Moderate and offer a non-refundable booking that comes with a 10% discount.
By giving guests this greater freedom, you’ll be increasing your skill at revenue management. This option will generate greater interest, higher views, and hopefully, more bookings.
According to an Airbnb press release, hosts who offered this 10% discount non-refundable booking option saw a 5% increase in revenue as a result. This is yet another way to perfect your approach to revenue management and attract the maximum number of bookings possible!
To sign up for dynamic pricing with DPGO, visit www.dpgo.com. We’re so confident that you’ll love DPGO that we’re offering a free 30-day trial.
Check out a few of our other posts! We’ve written a guide for Airbnb hosts on how to increase their occupancy rate throughout the year. You should also have a look at the Travel Trends for 2021!
Airbnb Dynamic Pricing Software for Maximum Revenue from DPGO
Ever thought about using an Airbnb Dynamic Pricing software? We know that running a successful Airbnb listing is a stressful endeavor. There are a million decisions to make, and without vital insights, how does one get started on running an optimized Airbnb listing?
At the heart of a successful Airbnb property or portfolio sits a strong pricing strategy. What you charge for your listing determines its success. The importance of choosing the right strategy for your company goals cannot be understated. Airbnb pricing is as critical as location, customer reviews, property features, and amenities.
Pricing Strategy and Airbnb Dynamic Pricing Software
First, let’s examine what we mean by a ‘pricing strategy’. A pricing strategy is a model or procedure that you use to determine the best prices for your property listing. If your pricing strategy is off base, you could scare away valuable bookings with prices that are too high. You could also lose out on a valuable income because your prices are too low and do not cover costs.
There are various pricing strategies that you can use, but none are more advanced than dynamic pricing. Before we can highlight how to use dynamic pricing, we first need to define dynamic pricing. Dynamic pricing is categorized by the use of market supply and demand data to get the best price for your product or service. This pricing strategy is based almost entirely on market insights. It depends on access to large quantities of data to gain an understanding of that specific market.
How does DPGO Dynamic Pricing Software help?
Our Airbnb Dynamic Pricing software finds this data and uses it to ascertain how much demand there is in the market. It then adjusts your prices accordingly. Based on AI-driven insights and deep learning technology, we’ve taken our offering to the next level. We developed our software to learn and improve its recommendations with every piece of data it reviews. By incorporating deep learning capabilities, our software will not only review live data but will also make informed market predictions. This will allow you to stay ahead of the curve.
As local market experts, we know how vital in-depth insights can be. Our DPGO platform allows you to set pricing rules for every aspect of your Airbnb booking process. DPGO gives you the freedom to set the limits of your pricing strategy without having to update daily.
In this blog post, we wanted to take you on an in-depth tour of the features that DPGO offers. We also wanted to explain some of our detailed insights and how they can help. We’ll explain these features, as well as let you in on a few insider tips and tricks from Team DPGO.
AI-Driven Dynamic Pricing
In order to be considered ‘AI-driven’, the software needs to consistently prioritize the acquisition and analysis of high-quality data. DPGO does this with ease. At present, we evaluate over 200 market data points in order to create our pricing recommendations. These recommendations are completely unique to each user’s Airbnb listing. Our Airbnb Dynamic Pricing software considers the following data points in its analysis, as well as many more:
By using these insights, our Airbnb Dynamic Pricing software builds a better picture of your listing. It then updates your prices to ensure that you win as many available bookings as possible. Anyone can mark down their prices and run at a loss – the art of dynamic pricing is earning as much as you can in a particular market atmosphere.
As Airbnb property investors ourselves, we know how important it is to maintain control of your listing. Without control, money can (and likely will) be left on the table for your competitors to pick up. We designed DPGO to include over 30 user input settings that allow you to keep hold of the finer details of your Airbnb pricing strategy, without having to physically oversee these variables on a daily or even weekly basis. Below, we’ll go into greater detail on which pricing limits and rules you can set on DPGO.
Our Airbnb Dynamic Pricing software allows you to enter a base price as well as maximum and minimum prices for your listing. Let’s explain what each of these terms means:
Base Price: A base price is the amount of money that your listing costs, without any charges or additional costs added on. This is the foundation of your pricing strategy. It allows better reporting on the profitability of your short-term vacation rental business.
Maximum Price: Setting a maximum price tells the DPGO software that it cannot charge any amount above this limit that you have set. There are two streams of thought on maximum price. The first says ‘why should I bother setting a maximum price when I could make more money?’. The second is more concerned with customers seeing drastic price changes. This might see them disconnect from the idea of booking your listing altogether. Setting a maximum price is purely your choice, and not required by DPGO.
Minimum Price:Minimum price is a little easier to understand. A minimum price means you will never have to honor a booking at a price lower than your break-even point. Airbnb listings are not free of costs and a minimum price will protect you from running at a loss.
We can work within your existing pricing framework to get you the best prices possible on the market. Being able to input these limits will contribute to the ultimate success of your short-term vacation rental business.
Your ‘Discounts’ section allows you to offer discounts based on the length of stay and the last-minute nature of the booking. To encourage last-minute bookings, it’s a good idea to offer a percentage decrease. This may help ensure that those dates are booked. You can choose the percentage and the number of days. If you want to encourage weekend bookings, offer a discount if you haven’t received any bookings by the Wednesday before.
Setting a long-term discount allows you to offer a financial incentive for longer stays. Set a percentage discount that you are comfortable with for stays that run over more than a week (seven nights) and over more than one month (28 nights). The percentage discount you offer is completely your choice.
There are four approaches that you can take to weekend pricing:
Recommended: Demand-driven pricing
Aggressive: Higher prices than data would recommend
Conservation:Lower prices than data would recommend
Custom: You set the percentage of price increase for weekends yourself
Setting weekend adjustments allows you to maximize earnings during the historically busier times of the week. This approach is common with big hotel chains too. Most informed Airbnb and other short-term vacation rental hosts will understand that increasing prices for busier periods makes total sense.
Finally, the ‘Seasonality’ tab allows you to take a more active role in determining your seasonal price adjustments. This section allows you to adjust your prices per month, based on your base price. This will not mean you need to change your pricing strategy. If you know that your peak season is June to August, make sure your seasonal adjustments reflect this insight.
The ‘Seasonality’ tab is based on the same principle that underpins DPGO – we want to make sure that your pricing enables you to collect as much in earnings from your Airbnb listings as possible. By optimizing your seasonal Airbnb pricing, you’re giving our Airbnb Dynamic Pricing software the added insights it needs to perfect its pricing approach for your property.
Real-Time Market Data
One of the greatest challenges of attempting dynamic pricing without the help of specially designed software is that your price adjustments may not be done at the optimal time to maximize your booking potential. In fact, enjoying market-sensitive updates is one of the greatest benefits of using an Airbnb Dynamic Pricing software.
Our software runs, depends, and relies on data to make decisions. If the bookings in your locale spike for a specific period, the software will automatically update your prices to ensure that you get the booking for the maximum price possible.
If you attempt to manage this process on your own, you won’t be privy to booking spikes and therefore won’t know to update your prices in the first place. Will you still get a booking for those specific dates? Possibly, but you certainly won’t get as high a rate for that booking and you risk not winning a booking at all if your prices are drastically out of touch with the market.
The instantaneous nature of these updates mean your DPGO software does not require any action from you to optimize earnings. You simply decide your pricing rules when you complete your initial set-up process and can then leave us to manage your pricing decisions.
Flexible Adjustments on DPGO Dynamic Pricing Software
DPGO combines the best features of a dynamic pricing strategy with those of a property management software. Not only can we optimize your pricing decisions, but we can set booking rules that will allow you to manage your Airbnb listing from your DPGO interface. Let’s take a look at the booking rules that you can set via DPGO to ensure that your occupancy rates run at as close to maximum as possible.
This is where you can set booking rules around the minimum number of nights that you require in order to accept a booking. There are four subsections to this page: General Minimum Stays, Day of the Week Minimum Stay, Time-Based Rules, and Date-Specific Rules. The first allows you to set a global minimum night stay, which is ordinarily set at one.
Day of the Week Minimum Stay
The ‘Day of the Week Minimum Stay’ section allows you to decide how many days you require to be booked in order to confirm a booking based solely on the day of the week. For example, many users set their minimum stay rules on Fridays to require at least three nights booked, or two nights booked on a Saturday. This will protect you against single night bookings over prime booking periods, like weekends.
The ‘Time-Based Rules’ section allows you to set minimum night stay rules based on the time that will elapse between booking and check-in. You can decide to set a rule that requires a minimum of two nights stay if the booking is confirmed within a week, for example. Or you can even require bookings far in advance to stay over three days in order to protect yourself from an empty booking calendar.
The ‘Date-Specific Rules’ allow you to set minimum night stays for specific periods in the year, like long-weekends or global holidays. Setting a rule here will protect you from the risk of running an empty calendar over your peak booking season.
We wanted to create the most holistic Airbnb pricing software for short term vacation rentals available on the market today and to do that, we included aspects of various strategies in order to create the most advanced, data-driven software platform possible.
One such pricing strategy that we took inspiration from was yield management, which is a variable pricing strategy. It’s based on understanding, influencing, and predicting customer behavior in order to maximize financial returns. We incorporated this approach to pricing by developing our deep learning technology.
Not only does our DPGO Airbnb Dynamic Pricing software alter your prices based on real-time data, but it also uses the deep learning technology that we developed to better predict customer behavior and keep your listing ahead of the market curve. With every piece of data that DPGO reviews, it learns more about the behaviors of your market and uses those insights to better inform pricing changes in the future.
One of our favorite features of DPGO is our advanced charting and reporting capabilities. Data can be hard to debunk, but with our help, you can ascertain quickly and easily if your pricing limits are working correctly and if you have chosen the optimal pricing strategy from our four options: recommended, more aggressive, more conservative, and custom. We offer six charting models that can display every aspect of your use of a dynamic pricing strategy and gives you greater insight into how you can further optimize your revenue.
Our Growth Performance capabilities include a listing health score to help you better understand the performance of your list vacation rental property. Your health score is a measure of how frequently your listing is getting booked and helps you determine whether you need to change your approach. It gives you a quick view of how well your listing is attracting bookings in a set booking window of 30 or 90 days.
A health score of 7.0 or higher is great, but one under that needs some fine-tuning. If your booking rates are too high, it’s likely that your listing is underpriced. If you have too few bookings, it is likely that your listing is overpriced.
Airbnb Dynamic Pricing Predictions & Calendar
We also forecast 52-week pricing predictions on your listing’s DPGO calendar to give you a better view of your annual booking rates. Having this data so clearly stated helps you make informed decisions on whether your Airbnb pricing strategy is working for you and your business goals.
In conclusion, we designed DPGO to give users full control of their pricing, while providing AI-driven, deep learning enriched information to help you better understand your listing’s booking trends.
To start your journey with DPGO, the most advanced Airbnb Dynamic Pricing software on the market, visit our website – www.dpgo.com – and claim your 30-day free trial!