Setting vacation rental rates
Setting the right rate for your vacation rental can be a stressful and confusing ordeal. You don’t want to charge too much, but you also don’t want to charge too little. You want a comfortable amount that you can safely charge to those coming and going from the rental. Your vacation rental business needs to be supported by a relevant income.
There are consequences to how you set your rate for your rental. If you set it too high then the rental might not have anyone that can afford to stay there or their expectations of the rental might be much higher than you can deliver, depending on how high the rate is.
If you set the rate too low then this might not bring in a profit, it might only attract people that abuse it and use it only as a cheap rental and it might not be rented out at all due to the low rent.
In order to have the perfect rental rate, you have to find a balance between the too low and too high rates. Using a four-step process is the best way to go about choosing the right rate that matches your property and makes everyone happy in the long run – you and your guests.
Keep in mind that whatever you choose to have your rate be, it is not permanent. You can change it and fine-tune all of the details and rates later when you get a bit more information and research under your belt.
Things to consider for your vacation rental rates
When it comes to cost, it is an important factor that anyone should consider. Before you jump ahead and find a price, you need to really consider the rental itself and what comes with it.
What could you safely charge for someone to stay inside it? What should you expect to get? These are all details that mean a lot when it comes to making the right rates for the rental and getting the right payout for it when someone stays in it.
1. Cost to run your rental
As a vacation rental owner, you want to make sure that you know how much it is going to cost for upkeep to keep the rental going. You need to be able to cover any and all overhead expenses and then make a little off the top, as well. You need to be able to calculate how much you spend to keep the rental going so keep in mind – mortgage, taxes, cable and internet, insurance, salaries, etc. which are prices that never change and then those that do such as guest supplies, property repairs and electric and gas.
Knowing how much is going out for the management of your vacation rental property can give you a base to start with because you have to cover all of these expenses when you rent it out. Keep in mind that this is something that you pay every month and those that are staying generally stay a week or less, which means you’ll have to break the costs down.
There is always going to be competition out there, so find out who is nearby and what they are offering. Know their prices and then compare with what you’re offering. Can you safely offer the same amenities at the same prices? Will these prices still cover the overhead costs?
While hotels are nice, rentals can actually cost more than hotel stays because they’re larger and private. People tend to pay more for this experience.
Research other vacation rentals around the area, as well as those that are like yours. This will give you an idea of what others are going for and what you may be able to get away with charging.
3. Automated pricing
For an affordable price, you can use a service that will automate the pricing for you. When the market changes, it can change your price but it will always make sure you’re covering your overhead so you don’t have to do all of that math yourself.
4. Extra fees
This is a debate amongst those that rent out to others. Do you want to charge extra fees on top of the rental fee for specific things? Is your rate high or low? Depending on where you fall and what you want to charge extra for, you may be able to do so comfortably. There are usually optional add-ons that are extra but not mandatory for those staying to get.