A common myth is that dynamic pricing will result in a race to the bottom. Airbnb’s comically low price recommendations have helped to further this myth. However, the opposite is true – frequently we see our customers happily increasing prices, with confidence, when they use Perfect Price. Let's dive into why!
Pricing for demand
Property management is a complex business, and there is a lot to manage. If you run less than 100 properties, it can be tough to dedicate staff to pricing – and if you run hundreds, it can be tough to keep track of everything and do all the analysis required to set the right prices, even with staff.
Therefore, keeping up with unit-specific demand is nearly impossible! This is where Artificial Intelligence comes in. AI can pinpoint demand in a market and have confidence in its recommendations. The AI also isn’t biased by the last 10 or 15 years – when the market was different than it is this year – and can react more quickly to current market conditions and rapid shifts.
A home sitting empty on a major holiday is a nightmare for the property manager – just think about how you’ll explain this one to your client! Because of this, most property managers are afraid to raise rates by more than a few percent, because the risk of losing the homeowner far outweighs the benefit from getting a slightly higher rate.
By managing pricing holistically, and having a complete picture of the market, the AI-based dynamic pricing software is able to get the units rented – at the best rate possible – and adjust rapidly if the market softens.
When a low price is best
There are times when a low price drives more revenue for the owner. Every market is different and you need a dynamic pricing partner who knows your market. Shoulder season can seem impossible to get bookings in, but with small changes, you can drive 10-20% more revenue for your owners.
Will dynamic pricing raise your prices?
The only way to find out, is to try it out! By putting a few properties on dynamic pricing, you can learn in a low-risk way, whether and how dynamic pricing will increase your performance for you and your owners.
Interested in seeing what dynamic pricing can do for your business? Get started by requesting a trial today!