Pricing Your Home

Pricing Your Home

You pay us to use our expertise. This is particularly true in relation to pricing. With experience, we've realised that the most important factor in regard to pricing is what the public are prepared to pay, rather than what we (or you) think your home is worth.

How we Price your Home

After your home is set up, photographed and ready for rental, we set the prices. This timing is used to ensure we’re fully aware of how your home presents to guests, and that we’re factoring in all of the hard work you put into setting up your home.

We then set the nightly rental rates for your home by ‘bookending’ your home with properties we manage that are similar. No two homes are the same, but our approach removes the guesswork, and generates prices for homes based on a successful model that generates income for owners and us.

With a minimum of 4 properties under review, we determine whether your home should be priced higher or lower (compared to each home) for all the 22 different tariffs per calendar year. We know the rental returns of all our homes, and whether they can achieve the Annual Returns we would expect (and have indicated to you) that your home will achieve. 

It needs to make sense for everyone

It is of course in the best interest of both owners and ourselves to generate as much rental revenue as possible for the dates that you’re not using the home yourself. We do this with a combination of pricing and minimum night stays to maximise returns when interest is high and to help generate demand when guest numbers are low.

The nightly rental rates need to be within a range of what we recommend to make your home a success for all parties. If your nightly pricing expectations are well above what we feel is appropriate for your home, your home will book less frequently. From experience, we know this can lead to:
  1. Lower annual returns for you and us – below the figure(s) we projected when you joined our group, and potentially making your home unsustainable for us to manage
  1. A cleaner who is dissatisfied with the regularity of cleaning jobs, making it not worthwhile to clean your home
Whilst our default approach is to price your home in a manner that generates solid numbers of bookings, we can discuss alternative approaches to more specifically fit your needs if required.  This can include setting parameters around pricing (e.g. a minimum amount) or discounted rates to generate even more bookings.

Guests have expectations on the value for money of homes compared to other homes in the market. What this means is that there are limits on what pricing we will list a home for to ensure that we balance the expectations of all parties.

Nightly Rates vs what a guest pays

The Gross Rental of a booking is the sum of Nightly Rates for a Guest to stay at your home. This is not what the Guest pays – they will usually pay (over and above the Gross Rental) a Service Fee, Booking Fee and Govt Levy. This often means they’re paying up to 30% more than the Gross Rental. For more information, see Understanding Booking Earnings.

The Next-Door Neighbour Analysis

Your next-door neighbour has an identical home to yours. Same number of bedrooms, bathrooms, modernity, amenities, sleeping capacity, THE LOT. They’ve been holiday renting for 3 years and have taken many bookings.  For your home to enter the market successfully, your home should be listed (slightly) lower than your neighbour’s home (as per Starting Pricing, below) to start with.

Starting Pricing

To help achieve a profile for a new home, when a home is listed, our approach is to come in slightly under market to generate strong initial bookings for you. This is done with a specific strategy in mind that capitalises on how major listing sites prioritise search results. Primarily, this is because, when your home is first listed, it will appear at the bottom of searches on the 3rd Party Websites because they use an algorithm to rank homes (weighted towards homes that take bookings). There are a lot of details and moving parts behind how this works and how we use our knowledge to maximise the visibility and performance of your home.

Comparing your home to others already in the market

When a home joins our group, we are sometimes asked: “I’ve seen a home(s) online that I think my home should be priced at/above”. If you have a query about your pricing, we are more than happy to have a look at any examples you may find of homes listed online and review the pricing. Some things to look for when doing this:
  1. Sleeping capacity, location and included amenities
  1. Whether linen is included for bookings at the other properties
  1. How well are those homes booking (i.e. what future bookings do they have)?
  1. Who manages those homes, and their pricing strategies

Reviewing Pricing

We closely monitor the performance and pricing of all homes in our group - particularly for new ones. Once a home has established itself on listing sites and taken a few bookings, we then review the pricing to see if price changes are justified. For new homes, the decision process considers how many bookings the home has taken and in what time frame. If the Market is showing stronger than expected demand for a home, we then would usually recommend a 5% increase and a further evaluation if bookings continue to come through at a higher-than-expected rate.

Likewise, if bookings are slower than expected, or as we get closer to some key dates and your home remains available, we may adjust the nightly rates and/or minimum night stay requirement to ensure we get you bookings. We may also offer returning guests a discount to rebook – often the discount will be less than the fees that the 3rd party websites charge you (as the owner), so you’re still better off.

Tariffs

Your home will be listed with different pricing bands to capitalise on demand. This means that prices for peak times, many long weekends and warmer months will be higher than shoulder or winter periods. Whilst many letting agents focus on only 3 tariffs, we run significantly more to capture the demand more closely. The same applies to minimum night stays where we leverage higher demand with longer stay requirements. This in turn reduces overheads for you and further improves your profitability per stay over those times. See Minimum Night Stays for more information.

The benefit of taking 1 & 2-night bookings

Winter bookings are typically shorter stays over weekends. They attract a lower rate and are therefore less profitable (as a percentage) per booking than longer peak stays (for more detail, see Understanding Booking Earnings. There is however a strong rationale to take bookings at these times:
  1. Shoulder and off-peak stays will generate most of a home's annual gross revenue (typically around 60-70%)
  1. Taking a higher number of bookings across the year will directly improve your homes ranking in search results across the most important listing websites
  1. This in turn puts your home in a stronger position to be visible for, and attract more, of the higher value stays at peak times.
See One Night Stays for more information. 

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