What is my Base Price and when should I change it? (VIDEO)
The Base Price is the starting point for our price fluctuations. Think of it as the median price for your listing for the year. We'll go above it during periods of high demand and below it during low demand periods.
Setting the correct Base Price for your listing is one of the keys to maximizing revenue. Once the right Base Price is set, we can appropriately apply factors that change nightly demand, such as Seasonality, Day of the Week and Local Events.
Initial Base Price
When you first connect your account you will see that there is an initial Base Price created for your listing. This is created by taking a look at your pricing for the next 60 days and adjusting for Seasonality in order to achieve roughly the same revenue you would at your current prices. This is just a reference point to get you started. You should always assess and adjust the Base Price before syncing your listing. So let's look at how to do that!
Setting your first Base Price
Whether you are an experienced host or new (see more info below), we recommend setting the Base Price in the Chart View Tab for your listing. Here you can easily identify demand trends caused by Seasonality, Day of the Week and Local Events.
Looking at our listing in Orlando, Florida in the Chart View we can see the bumps in the suggested pricing showing variation between weekdays and weekends, lower suggested prices during low season and higher suggested prices during high season, as well as spikes for holidays.
The Chart View also a great place to see the impact that changing the Base Price has on the next 365 days.
So with a Base Price of $150 we are suggesting a nightly price of $173 for August 30th, 2019 (Labor Day), for example. With a Base Price of $200 we are suggesting a nightly price of $231 for August 30th, 2019.
If you have been renting out your property for awhile, you should set your Base Price at the average price you've been getting bookings at. For example, if you charge $200 per night in the summer and $150 in the winter, the average is $175. You can set your first Base Price at $175. If you simply have a weekday and a weekend price, it would be the average of those two.
New to vacation rentals
If you're a new host and you don't have any bookings yet, we recommend checking out the Nearby Listings tab. Here you can see information on listings in your area you are competing directly against. As a first step, sort the Nearby Listings by Health Score and focus your attention on the listings with good Health Scores. A good Health Score generally means that the property is booking well, so this is a good guide as to what your starting Base Price might be.
Having said that, as a general rule we do not recommend making Base Price decisions by copying your local competition. As we like to say, you wouldn't want to cheat off a C student! Rather, we recommend opening a few listings on Airbnb or HomeAway/VRBO to see how they look online. So, for example, if you find a listing that is similar to yours but yours has a pool, you may be able to charge a higher price.
Another good guide as to where to set your initial Base Price is the Neighborhood Pricing Chart on the Market Data Tab for your listing. Here you can see the Airbnb and HomeAway/VRBO average pricing for any given day and see how our suggested pricing compares at your current Base Price. You can also toggle on the Airbnb and HomeAway/VRBO average price for the year to see if your Base Price is in line.
Adjusting your Base Price
So now that you have a good starting Base Price, you're ready to go. The next step is to watch how well you book at this Base Price to determine if you have the right Base Price, or if you should adjust it.
This is where your Health Score comes in. Your Health Score is designed to be a feedback loop of how well your Base Price is doing where it is currently set. It is essentially a measure of your booking pace and helps you determine whether your listing is booking up too quickly, too slowly, or just right.
To monitor your Booking Pace relative to the ideal Booking Pace in your market, hover over the “?” next to Occupancy on your Beyond Pricing Dashboard:
In general, we advise that if your listing’s performance is “Too Low”, the best next step is to lower the Base Price for that listing by 5-10% to begin to capture more bookings.
Conversely, if your listing’s performance is “Too High”, the next step is to raise your Base Price by 5-10% to start to capture bookings with a higher Average Daily Rate (ADR).
Let's take a look at some examples.
For our listing in Seattle, Washington the ideal booking percentage is 40% booked for the next 30 days and we are 90% booked. The ideal booking percentage for the next 90 days is 18% booked and we are 75% booked. We are much higher than the ideals and have a low Health Score of 50.
Action: Increase Base Price
For our listing in Palm Springs, California the ideal booking percentage is 63% booked for the next 30 days and we are 10% booked. The ideal booking percentage for the next 90 days is 31% booked and we are 14% booked. We are much lower than the ideals and have a low Health Score of 30.
Action: Decrease Base Price
For our listing in Orlando, Florida the ideal booking percentage is 66% booked for the next 30 days and we are 60% booked. The ideal booking percentage for the next 90 days is 38% booked and we are 36% booked. We are really close to the ideals and have a great Health Score of 93.
Action: No Base Price adjustment needed
We recommend monitoring your Booking Pace at least every two weeks effectively hone in on the optimal Base Price for your listing.
A lot of people ask why it's not necessarily good to be fully booked up. Sometimes, it means we know you could get booked at a higher rate, so you are leaving money on the table. Click here to learn more about how we help you optimize your revenue by helping you strike the right balance between number of nights booked and nightly price.
Additional fees and your Base Price
Our price recommendations are for your nightly rate. But we understand that you have other fees associated with your listing and these are indirectly factored into our algorithm. Our general guidelines are:
Cleaning Fee - Charge what it costs you. This way, even if you receive a one-night booking at a low rate, you'll still be sure to cover your costs. It's also the fair thing to do.
Extra Guest Fee - Generally, we don't recommend charging an extra guest fee for fewer guests than two times the number of beds.
For example: if you have a two bedroom listing with two beds, the first four guests would be free.
Beyond Pricing adjusts for these by looking at how quickly your listing books up.
For example: let's say you and a neighbor both have great one-bedroom apartments available for $200 per night. If your cleaning fee is $200 and theirs is $50, you'll probably get fewer bookings than your neighbor. If you get too few bookings, your booking percentage will be too low, your Health Score will go down, and you'll know it's time to lower your Base Price to, say, $150 per night.
We recommend that you look at other listings in your area to see what the average cleaning and guest fees are so you won't have to make up for it with a lower room rate.
Your Minimum Price is the lowest rate you'd be willing to accept for a night. This is completely up to you. We recommend setting it as low as you feel comfortable. This doesn’t mean our suggested pricing will ever reach that point; rather, it allows for appropriate fluctuation in the daily rate given the demand in your market. Just remember that a high Minimum Price will likely result in fewer bookings in periods of low demand and limit last minute bookings.
If you reduce your Base Price you may also need to reduce your Minimum Price to allow our pricing suggestions to fluctuate.
For our listing in Orlando, Florida if we reduce our Base Price from $150 to $100 you can see that during periods of low demand we hit our Minimum Price of $90 and we are essentially flat pricing throughout September. If we reduce our Minimum Price from $90 to $70 you can see our suggested pricing fluctuate more throughout that period.