What is my Base Price and when should I change it?
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 week, local events, and more.
Setting your Base Price
We define 'Base Price', as the average price you would charge for your listing.
If you're an experienced host or owner, this will simply be 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, your average price (and thus your base price) would be $175. If you simply have a weekday and a weekend price, it would be the average of those two.
The chart below is a great example of setting a Base Price. The tan line is the current pricing structure and the blue line is our predicted price. During high periods of demand, we are increasing rates to drive a higher average nightly rate. During low periods of demand we are decreasing rates in order to drive occupancy.
If you're a new host and you don't have any bookings yet, simply use the nearby listings tab in Beyond Pricing or view the website you listed on to see similar listings in your neighborhood (with the same number of bedrooms) and find a few that are similar in quality and that have at least 30-80% of their next 30 days booked. Set your Base Price slightly below (15-20%) the average until you have your first 3-4 bookings and a few reviews.
Once your initial Base Price is set, your Health Score will let you know how you're doing by comparing your booking curve to the ideal booking curve. This helps us determine whether your listing is booking too quickly, too slowly, or just right.
Changing 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. We look at a number of statistics about your listing and compare them to an ideal.
For example, some calculations that help us discern how you are doing include:
- Your current prices for each day
- Percent of Nights Booked, next 30 days
- Percent of Nights Booked, next 60 days
- Percent of Nights Booked, next 90 days
We review your Booking Percentage for multiple timeframes to ensure that our model does not over-correct. For example, if your next 45 days are overbooked, but your next 90 days are underbooked, we balance these figures when calculating your Health Score.
Your Health Score and Booking Percentage are there to give you information about whether your Base Price is working or if it needs to be adjusted.
Because of that, to turn information into action, you should keep an eye on your Health Score and adjust your Base Price (if need be) every week. Depending on how overbooked or underbooked you are, you should consider changing your Base Price by a different percentage. For instance, if your Booking % is only slightly too high, you may only want to increase your Base Price by 5%. If you Booking % is very low, on the other hand, you may want to decrease your Base Price by 15-20% until bookings start picking up.
To take an extreme, if your listing was 100% booked out for the next 60 days, we'd know that you should raise your Base Price dramatically, and our booking table would tell you how you should be pricing.
A lot of people ask why it's not good to be fully booked up. We wrote a great blog post about why being fully booked far in advance is actually bad means you're leaving money on the table. We help you optimize your revenue, which is a combination of the percent of nights booked and the price.
By keeping an eye on your Health Score and your booking percentages, you can make sure you're always balanced between the highest price and the highest occupancy.
Now that you've set your Base Price, we use our Local Demand Model to price each available night on your calendar.