Getting your Vrbo pricing strategy right can greatly affect your vacation rental profits. After all, the optimal price can attract more guests and ultimately lead to higher earnings.
In this post, we’ll walk you through some simple tips and best practices to help you set the perfect price, improve your pricing strategy, and get the most out of your property.
How Does Vrbo Pricing Work?
Let’s take a quick look at how Vrbo pricing works. The total cost of booking a vacation rental on Vrbo is determined by several factors, including:
- Nightly rate: This is the base rate you set for each night of the stay.
- Service fee: The service fee is a percentage of the total reservation amount, excluding taxes and refundable fees. This fee covers secure payment, developing the platform, and round-the-clock customer service.
- Cleaning fee: Some hosts may charge a cleaning fee to cover the cost of cleaning the rental space between guests.
- Pet fees: If they allow pets in the rental, hosts can charge a pet fee to compensate for any additional cleaning this requires.
- Security deposit: Certain bookings may require a security deposit, either set by the host or by Vrbo, to cover any potential damages during the stay.
- Taxes: Depending on the location of the rental property and local regulations, guests may also be charged taxes as part of the booking.
Guests who book through Vrbo know that there may be additional fees beyond the nightly rate. So, if you want more guests to book your rental property despite all the fees, you should offer transparent pricing and keep these extra costs reasonable.
Tips to Improve Your Vrbo Pricing Strategy
When your listing is brand new and lacks reviews, it can be tough to catch the attention of potential guests, especially with so many other options available. In this case, you might want to try lowering your price to attract guests to choose your rental.
Once you start getting bookings and reviews, you can use these pricing strategies to set competitive rates and make more money:
1. Use a Vrbo Pricing Tool
Keeping track of your listing’s demand can be tricky, with changes happening due to seasons, weekends, local events, and competition. That’s where dynamic pricing tools come in handy.
A dynamic pricing tool can help you keep your rates consistent and competitive by automatically adjusting your prices based on demand and market conditions. This is the best and easiest way to optimize your Vrbo pricing strategy.
Generally, we recommend using dynamic pricing tools and then fine-tuning your strategy with other tips we’ll share.
PriceLabs and Beyond are popular options among the Vrbo hosts, and you can find out more about them in our in-depth PriceLabs review and Beyond review.
2. Analyze Your Occupancy Rates and Identify Trends
Knowing when your property is most popular can help you set the right prices for maximum profits.
Keep an eye on how often your place gets booked and look for any patterns. This will help you decide if you need to change your prices.
For example, if fewer people are booking during certain times, you might want to lower your prices to attract more guests.
3. Set Occupancy Goals
Do you want your place to be fully booked during busy times, or do you want to attract more guests during quieter periods? Knowing your goals can help you decide on your pricing strategy.
Your occupancy targets will also depend on where your rental is located. For example, if you’re in a ski resort like Vail, Colorado, aiming for full occupancy might not be realistic.
But if you’re in a city that’s busy all year round and you’re willing to lower your prices during slow times, you might aim for occupancy rates similar to hotels, which are typically around 80-90%. Just remember that vacation rentals usually have lower occupancy rates than hotels, so aim high but be realistic.
4. Analyze Your Price History and Determine Your Average Rate Per Night
If you’ve been renting out your vacation home for a while, looking at your pricing history can give you a good idea of how your rental has been performing.
By checking out past pricing data and trends, you can spot patterns in how guests book and figure out your average nightly rate. With this info, you can make smarter decisions about changing your rates to make more money and stay ahead in the market.
If you’re new to hosting, analyzing your pricing strategy might be a bit trickier, but there are ways to get started.
First, find a similar listing on Vrbo that’s got a few bookings lined up. Take a look at its rates for different times of the year and calculate an average nightly rate. This can give you a baseline to work with.
Then, think about what makes your place special. Do you offer something unique, like an electric car charging port? Highlighting these features in your listing can help justify charging a bit more.
5. Research Holidays and Major Events That Create Peak Demand For Your Rental
Demand and pricing for vacation rentals can change a lot depending on the time of year and events in your area. If there are any holidays, festivals, conferences, or celebrations in your city, this can be your chance to make more money.
You can increase your rate slightly during these peak times, and boost your profits for those periods.
Also, if you’re new to hosting, listing your home for a big event can help you get those first bookings faster and bring in more competition from other hosts.
If you don’t want to research events manually, you can use Vrbo MarketMaker. This is a free tool that collects and analyzes real-time market data from your and your competitors’ Property Management Systems (PMS). It can tell you about local events that affect rental bookings in that area, forecasted occupancy levels, travelers’ searches, and more.
Head to our MarketMaker overview to learn more about it and its insights.
6. Compare the Demand Trends For Weekdays vs Weekends
It’s important to know how demand differs between weekdays and weekends when setting prices for your Vrbo rental.
You can use dynamic pricing tools or Vrbo MarketMaker to analyze booking patterns and occupancy rates to pinpoint differences in demand between these two types of days. With this insight, you can adjust your rates to mirror fluctuations in demand and optimize your pricing strategy for each day of the week.
For example, if you have a place in a busy tourist spot like Miami Beach or Orlando, weekends might be much busier than weekdays. But if you’re in a city like Boston with a lot of business travelers during the week, the demand might stay pretty consistent.
Once you get a better understanding of demand trends, you can use different pricing strategies like offering discounted rates for midweek stays or charging a premium for weekend getaways to boost your rental revenue.
7. Factor in the Fees
Don’t forget to account for fees when setting your rental rates. Consider cleaning fees, service fees charged by Vrbo, and any other additional costs that may impact the total price for guests.
Let’s say the typical cleaning fee in your area is around $100, but your cleaning service bills you $120. In that case, you might need to tweak your rates to keep things profitable.
These costs affect how much you make, so it’s essential to consider them when setting your nightly rates.
Final Thoughts
By understanding how Vrbo pricing works and implementing the right strategies, you can attract more guests, optimize your rates, and ultimately increase your rental revenue.
Start by using a Vrbo pricing tool like PriceLabs and Beyond. These tools automatically adjust your rates based on demand and market conditions.
To set a fair and competitive average nightly rate, review your past pricing.
Then, look at your occupancy rates and booking patterns to see when your property is most popular. Adjust your rates accordingly to make the most of busy times and attract guests during slower periods.
Another way to capitalize on high-demand periods is to keep an eye on holidays, events, and local trends.
Make sure to also factor in the different demand levels on weekends versus weekdays when you’re adjusting your rates. This way, you can offer competitive prices for guests, regardless of when they decide to book.
Lastly, remember to consider extra costs like cleaning fees and Vrbo service charges when setting your rates to ensure you’re maximizing your earnings.
