Finding the right rental charge for your vacation property takes a little bit of knowledge and strategy to set just the right price. It can feel like a tough game requiring plenty of skill if you are first starting out.

Getting your rental charge price wrong is not uncommon with brand-new vacation rental hosts it is a good idea to glean as much knowledge as possible before finding that sweet spot rental charge and officially listing your vacation rental.

If you set your price too low you can’t be missing out on extra income and possibly attract guests that are less than responsible. If you set your rental fee too high you could end up with an empty property during much of the year and guests that do come in may have very high and unrealistic expectations for the price they are paying.

The importance of rental pricing strategy

Once you have a great price the job has only begun. You want to make sure that your vacation rental business is successful in the long run and to do this you need to plan and have a pricing strategy that you can continually come back to. This will help you to stay on top of fluctuation in the market and seasonal changes as well as anything else that may affect current pricing for vacation rentals in the industry. This will help you to spot pricing trends early and take action and be proactive so you can remain competitive, especially in markets where there are plenty of vacation rentals around.

Quick steps to setting a vacation rental price

Cut down on operating costs

It is not uncommon for new vacation property owners to underestimate how much operation costs will be in total. You want to make sure you know these costs so that you can get a good idea of what your profit will be when you set your vacation rental fees in addition to the mortgage, utility, and tax payments there are also items like cleaning services, emergency repairs, landscaping, and maybe even a few potential legal fees.

It is also good to make sure you factor in replacing any large Items like furniture and appliances as well as things like repainting or replacing the roof.

Research, research and research some more

Make sure you are finding any information you can from all different avenues to get the best picture of the rental market where your vacation property is. Look on the Internet, glean from newspapers, ask other rental owners, look at online discussion forums, and more.

Make sure you’re comparing your rental to one that is similar with the same size and amenities and general location. There are some amenities in rentals that will merit a larger rental for you such as a walkable distance to amenities.

Price just under the competition or offer more comfort

You always want to be aware of the top vacation rental properties in your area that are similar to yours. This is your competition. The savviest vacation rental owners are well aware of what their competitors are offering and the prices they charge. You want to be able to stay competitive with them. This can mean keeping your prices just below your competitor to intrigue new guests or offer a little something more for the same pricing.

Know your peak season

Pretty much every vacation rental home has a peak season especially if it is within a prime vacation area. For the Coachella Valley that is going to be a festival season. It is not unusual to charge premium prices during this season as the demand increases exponentially at this time. It is still critical however to make sure you are not setting your prices too high during this time.

Account for potential vacancy

Even in a high-demand area and having the most successful vacation rental in the town there is times of vacancy. It is good to make sure that you account for times of vacancy and make sure that you are estimating for it. It is always better to overestimate than to underestimate. It is especially essential when you are just starting out a new vacation rental property.

Consider the purchase of a dynamic pricing tool

The vacation rental industry has come a long way just in the past decade and as such there are several great tools that can help your vacation rental owner become successful one of these is a dynamic pricing tool. This is software such as Pricelabs that helps you to determine a price and adjust it accordingly to current market trends. The software uses a data-driven approach to help analyze factors including competition, location, and occupancy to help you set the best price for your property. Some of these tools you can even connect directly to your vacation rental software site.

Get knowledge from a financial expert with experience

It is always a good idea to hire a financial expert that can help you to analyze and determine your best business courses with your vacation rental. While you certainly can go alone it may take a lot of time and a lot of unfortunate and costly mistakes without a professional guide on your side. Hiring an accountant that is well-versed in vacation rental business running is a very smart plan to help get you up on your feet.

For more information on purchasing investment properties in Coachella Valley please contact us anytime.