The self-catering market is growing and thriving and as the market has advanced and matured, so have the technologies that support it.
One of the best and most effective technologies being implemented is dynamic pricing – it not only automates and simplifies many aspects of pricing, it also frees up valuable time for you to focus on other aspects of the business (think about how many hours you’ve spent having to price your properties!).
As with most new technologies, however, there are some who hesitate to implement them. This is completely understandable and natural, but the hesitancy usually stems from misunderstandings of the technology.
Beyond has helped us to understand and debunk the five most persistent dynamic pricing myths.
Myth #1: Dynamic Pricing Requires Perfect, Long-Term Data
It’s true that in order for dynamic pricing to work, it requires data. It does not, however, have to be perfect or fully complete. Similar to how public opinion surveys require only a small sample of the total population to gain accurate insights, dynamic pricing leverages strong samples of various listings in hyper-local markets to identify the correct price at the right time.
Our partners at Beyond have over eight years of data from more than 350,000 listings in their database. This powers their algorithm and gives them the ability to slice millions of points of data to ensure that each unique listing is priced as accurately as possible.
Myth #2: Dynamic Pricing Will Drive Prices Down Too Far In Low Season, Leading to Undesirable Guests and Unprofitable Bookings
While it’s true that lower prices have the possibility of attracting undesirable guests, there are many safeguards that can be put in place in order to mitigate this. During Beyond’s onboarding process, they spend a lot of time working with property owners to ensure they know about the parameters that can be set within the dynamic pricing algorithm. For example:
- Beyond analyses each listing they price, working with property managers to understand the best balance between the cost of a night, owner requirements, and market trends.
- Each listing has the ability to set a minimum price, so while the algorithm will adjust pricing to match market demand, it will not go below whatever minimum price was set.
- Actions like higher security deposits, up-front payments, and stricter cancellation policies can help in keeping undesirable guests from booking your property.
Myth #3: Dynamic Pricing is Price Gouging
In its simplest form, dynamic pricing simply tries to match supply and demand. At periods of high demand, the algorithm increases the price so that all properties get filled by the guest with the highest “willingness to pay.”
“Price gouging” is charging excessively high prices for basic necessities like food, water, and gas, and is usually done in times of peril. We, quite frankly, find these practices shocking.
There’s a big difference between charging someone relocating due to a natural disaster £10,000 a night versus asking for 17% above last year’s rates for a (optional) luxury holiday when your phone is ringing off the hook.
Myth #4: Dynamic Pricing Is a Black Box With No Control
Dynamic pricing doesn’t take away your control of your prices—it literally does the opposite! It automates the repetitive and mundane tasks according to your inputs, making sure that your prices match the market demand of every season of the year. This allows you to spend more time on higher value-added parts of the business, like acing your guest communication or attracting new owners.
Dynamic pricing automates a lot of the work for you. But just as any good tool, it still allows you to have input when and where you want through customisations. These are still your prices— Beyond just deliver them to you 98% complete and you can finish them any way you want.
Myth #5: Dynamic Pricing Is Only For the Big Guys and Is Bad For Repeat Guests
It doesn’t matter if you’re renting out the spare bedroom in your house or you oversee a short-term rental empire, dynamic pricing will work for you. We price at the individual property level, so everyone gets to leverage the same data and the same tool!
With regards to repeat guests, dynamic pricing can, in fact, be bad for repeat guests (bet you weren’t expecting us to say that!). This is not the tool’s fault. If you’ve been giving repeat guests great deals and decide to continue to do so, that is your choice to make as a property manager and how you choose to run your business, not because you didn’t know you had options to get higher prices.
Hopefully, debunking these myths has given you more clarity into how dynamic pricing works and how you can leverage its power to run your business better.
If you want to learn more, please join us and our partner SuperControl for an exciting Facebook Live event, where you’ll get to hear first-hand from users who leverage dynamic pricing every day!
Facebook Live Event: Beyond and SuperControl
Date: November 3, 2021
Time: 7pm UK Time
*This event is exclusively for the SuperControl community, the Facebook group is closed to non-members.