Updated July 2023
Go up, go down, or stay the same?
That’s the question on the mind of vacation rental owners, whether they are relatively new to renting or have been renting for years. Before making a decision on which of the three is right for you, we recommend first asking yourself a few important questions.
How were bookings last season?
If you were completely booked by February, you might consider raising your rates. If, on the other hand, it was a struggle and you had to reduce your price for more than one or two available weeks, that’s a sign that you should keep your prices the same.
What is my competition charging?
One of the best methods of assessing your pricing is to see what comparative rental properties in your area are asking for their homes. Conduct an Advanced Search to view other homes similar to yours. First search in your immediate town. Input the number of bedrooms, the number of guests your home accommodates, and some of your home’s key amenities. How does your home stack up to similar ones in terms of price?
Next, search a larger geographic area, such as all of the Mid-Cape or the entire island of Martha’s Vineyard, for example. After all, your competition can be located in surrounding towns. Some vacationers have never even been to the Cape, Martha’s Vineyard or Nantucket before, so they may be conducting a very broad search.
I agree that it’s not easy to compare homes. Your home might be newer and have more amenities, while another in the same price range might be closer to the beach. That being said, you’ll get a good sense of the properties vacationers are comparing your home to and how they are priced.
Can I adjust my price cap?
While you’re conducting the Advanced Search, check out the price cap options, keeping in mind that when vacationers choose a price cap. Vacationers can choose to see the listings presented in order from most expensive to least. So, let’s say you’re thinking of asking around $2000 a week. Don’t be tempted to tack on an extra $50 to make it $2050 – your listing would not come up in a search with the cap of $2000. By the same token, resist the temptation to ask $1,995 (an old marketing trick to make the price sound lower) – all of the homes listed at $2000 would be listed ahead of yours.
Would I benefit from using tiered pricing?
Yes. Keep in mind that the most popular weeks of the summer are the last two weeks of July and the first two to three weeks of August. The most difficult weeks to rent are the last week of August and, believe it or not, Fourth of July week.
With schools starting earlier these days, the last week of August isn’t popular with families who have school-age children or are employed by a school or university. The Fourth of July is a bit of an enigma. One theory is that many vacationers already have one or two extra days off around the Fourth, so they choose to take their weeklong vacation at another point during the summer. Some vacationers may balk at the large crowds, and others may have longstanding, annual, family or community events elsewhere preventing them from vacationing then.
At any rate, you’d be wise to price at least the last week of August at a lower rate than the other summer weeks from the outset. Those owners who wait too long to reduce the price often end up lowering it even further as the week draws near. Our listings include the option to post “Owner Specials,” for example, or “Last-minute Availability Alerts” to further highlight a property’s availability and incentivize vacationers.
Should I lower my prices in the shoulder season?
It’s all about supply and demand. The shoulder season – particularly the fall – offers many advantages for vacationers: warm days, cool nights, no humidity, no crowds, and seasonal restaurants that are still open. However, fewer families are able to take vacations at that time. As a result, the inventory of available homes goes way up as the demand goes down.
Consider the size of your home. Smaller homes tend to rent more successfully in the shoulder season, while larger homes (4+ bedrooms) are more difficult to rent.
If you want to fill more weeks during the shoulder season, you’ll want to offer attractive rates. You might need to adjust your rates by as much as half of your high season weekly rate. Also, consider a shorter minimum stay and increasing your daily rate to make renting for a shorter stay worth your while. This is particularly the case for larger homes, which are in less demand for a full week.
Am I comfortable with my pricing and booking process?
Occasionally I’ll mention to an owner that I think their prices are low. Some respond that they are comfortable with their prices where they are because they book early, few vacationers ask about a discount, and they get a lot of repeat renters (the best kind)! Other owners utilize a more aggressive pricing model, especially in the early booking season. They are perfectly fine with negotiating their higher rate with prospective guests and then modifying their rate as the rental season nears. My advice is to decide what your own comfort zone is and stick with it.