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Vacation Rental Pricing

The growth of vacation rental properties has seen record popularity in the last decade. Pricing expert from Simon Kucher & Partners and #PPSDALLAS18 Pricing Workshop leader Dylan Vest shares insight for property owners in this guest blog post about the vacation industry's intersection with pricing strategies. In recent years, sites like VRBO and Airbnb have made it easier than ever before to connect property owners and investors to aspiring vacationers. Unfortunately, the same tools are creating a glut in the market for short-term rentals as anyone with an extra bedroom is taking a shot at this seemingly easy “side-hustle”. If you’re serious about building a profitable rental business, there are a few pricing considerations throughout the three major phases of the transaction that might just help fund your own vacation.
Preparing your listing
Before your listing goes “live” you need to answer two major questions that will inform your basic price structure:

What value are you providing and what is your objective?

The base rate of the rental will ultimately be determined by what value you’re delivering. It’s not just about having a newly renovated IKEA kitchen or an ocean-front view. Do you have a fenced in yard that would save someone the cost of boarding their dog? Are you close to the airport, which might save a prospective tenant an hour (and Uber fares) on each leg of their trip? Consider these elements when developing a base rate and don’t just price based on comparable rentals in the area. The minimum rental period is a great way to boost revenue without raising the price, but it will also be guided by your overall objective. If maximizing revenue is your objective, then keep the minimum stay length at one day; if you’re willing to sacrifice some occupancy for less turnover-related work, consider extending it to three to five days.

Increasing the minimum booking length can improve overall profitability.

Going "LIVE"
Once a base rate is established, two major factors will serve as inputs to the final customer price: demand, about which I’ll discuss a combined approach, as well as services-related fees. Seasonal demand will be a major price driver for almost every vacation rental out there. Most people vacation in the summer, so in many situations it will make sense to price May-September at a higher multiple of your base rate, but this isn’t always the case. Consider the average Appalachian Mountain cabin, for which demand peaks with the fall foliage color. Local events can have an acute effect on demand for specific days on the calendar and should be priced accordingly. Step one is identifying the key events for the year, and step two is ensuring that the days leading up to and following the event are adjusted properly. Tip: Hosts often want to block out dates for themselves to use a particular rental during parts of the year. Instead of blocking the date, consider raising the price to a level that would cause you to reconsider your own plans. This is the same logic as Zillow’s “Make me move” price. Charging a cleaning fee is the industry standard. This covers the cost of getting the property ready for the next tenant and should be a part of all rental transactions. Additional services and associated fees can be a great way to offer an added value to the customer at a higher cost. In the pricing industry, we call this “maximizing willingness-to-pay.” Allowing a pet to stay at the house with an additional fee is a service that serves to eliminate the need for boarding. Charging a fee for additional guests beyond a stated capacity is a service that prevents people from needing to book a second hotel room or house nearby. Understanding, defining and charging properly for these services can have a tremendous impact on your bottom line.

Smart fee inclusion can drastically boost overall revenue (% from an actual portfolio property in 2018)

The follow-through
Before the first guest arrives, consider the following tools to protect you from additional incurred costs, minimize churn of high-quality guests, and maximize long-term pricing potential. Security deposits are designed to cover just about anything done by the tenant that leads to additional work or causes damage. At the very least, be sure that you include “inspect for damage” in your cleaning service’s to-do list and when you find it, charge for it. You may also consider specific charges for a sink full of dirty dishes or failure to take out the trash. Rebooking discounts on a future vacation is a great way to lure customers back next year, but don’t give it away too easily. Consider offering a 10% discount for a review online, an above average length stay, or a booking during the offseason. In 2018, reviews and ratings build a brand. These reviews can have a tremendous impact on the long-term success of your rental. Provide a hard copy means for providing feedback such as a guest log, and request that users cite at least one potential improvement here. This will give tenants a forum for complaints without having to post it via a public review. Oh yeah, listen to - and act upon - the feedback! About the Author: Contact Dylan directly about this article and his upcoming appearance during #PPSDALLAS18 via email: Dylan.vest@simon-kucher.com Dylan Vest will be leading a workshop during our 29th Annual Fall Pricing Workshops and Conference event in Dallas, Texas titled "Getting Your Customer Pricing Right" on Tuesday, October 23.

Read the Workshop details below and click the image to learn more! www.simon-kucher.com:

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Digitization Lessons With Syncron

Syncron's Notes on Digitization

Our friends at Syncron, renowned for delivering pricing valuable pricing strategies, know the importance of companies mastering digitization. Syncron joined us in Chicago for the 29th Annual Spring Pricing Workshops & Conference with featured roles as proud Sponsors and pricing expert Cliff Isaacson, as a Breakout Track Speaker. Several attendees took the opportunity to learn about ways digitalization can improve their strategies and Syncron was in the audience taking amazing notes! Brad Soper of Simon-Kucher & Partners, an expert well-versed in strategies for successful monetization, shared the latest tips on ways to make digital initiatives work, how to design and improve digital plans, and creating top- and bottom-line growth strategies that deliver measurable results. Soper's #PPSCHI18 session was well versed in strategies for successful monetization, including what makes certain digital initiatives work, and designing better digital plans. According to Syncron, Brad Soper shared that in digitization, there are three types of companies:
  1. Companies that make things happen – The Digital Heroes.
  2. Companies that watch things happen – The Digital Followers.
  3. Companies that wonder what happened – The Digital Naives.

Syncron's Notes on Digitization

Click HERE to read the full SYNCRON blog post:

Thank you so much for crafting this great write-up! For more #PPSCHI18 recaps and pricing shares, follow the hashtag across Social Media or view our Official Conference Recap Blog.

Join us this Fall in Dallas, Texas! Registration is NOW OPEN!

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#PPSDALLAS18 Official Release

For Immediate Release Dallas, Texas Will Host The Professional Pricing Society (PPS) and The 29th Annual Fall Pricing Workshops & Conference: Achieving Peak Profitability ATLANTA, GEORGIA, The Professional Pricing Society (PPS) proudly announces that the PPS 29th Annual Fall Pricing Workshops & Conference will be taking place in Dallas, Texas, on October 23-26, 2018. The Renaissance Dallas Addison Hotel is graciously hosting this highly anticipated event for well over 500 business professionals focused on achieving peak profitability within their organizations. “PPS is excited to bring our pricing expertise to Dallas, with the headquarters of 22 Fortune 500 companies, and strong industrial, and financial sectors,” said PPS President, Kevin Mitchell. “We are particularly focused on discussing emerging trends in revenue management, margin enhancement, sales, and profitability.”The Fall Pricing Workshops & Conference will include:
  • Over two days of Certified Pricing Professional (CPP) workshops
  • 4 breakout tracks
  • More than 40 speakers
  • 2 full conference days
  • More than 100 hours of networking
The Professional Pricing Society (PPS) is a member association of professionals committed to distributing pricing expertise throughout the business world. We provide leading-edge pricing and revenue management best practices. PPS produces up to five major annual pricing conferences in Europe, North America, South America, and Asia. PPS also offers more than two dozen, full-day training workshops every year, taught by leaders in the business community. These workshops serve as the foundation for PPS’s Certified Pricing Professional (CPP) designation. PPS distributes publications to its members which includes an eight-page monthly newsletter and a 36-page quarterly journal. The PPS website (http://www.pricingsociety.com) is a central resource for state-of-the-art pricing knowledge and hosts a job site where professionals can post or review new opportunities in the industry. PPS also maintains a Pricing Blog, and a Pricing Group on LinkedIn, and can be followed on Twitter @pricingsociety.

CLICK HERE for more information about the 29th Annual Fall Pricing Workshops & Conference

Or Please Visit:

https://pricingsociety.com/conferences/fall-pricing-conference

Or Contact:

Lisa Fisher

+1-770-509-9933

lisa@pricingsociety.com

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A SaaS Pricing Guide By OpenView

Improving SaaS pricing strategies can be difficult without the right tools aren't in place. The best tools to update and improve a SaaS pricing strategy can be found in this new pricing guide by OpenView. Best practices in SaaS pricing have evolved over the years, so our friends at OpenView updated their classic guide to help practitioners stay ahead of the curve. It includes the latest and greatest SaaS pricing resources, as well as some timeless staples. The content is sourced from OpenView as well as pricing leaders including Price Intelligently, Simon-Kucher & Partners, OnStartups and Sixteen Ventures. Read the latest strategic suggestions for the industry in this blog post from OPENVIEW!

Click HERE TO READ the full blog post

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Thank you, Chicago: The #PPSCHI18 Recap

On May 1-4, 2018 PPS hosted the Pricing event of the season in Rosemont, IL, the 29th Annual Spring Pricing Workshops & Conference! Well-over 500 registered attendees descended on the Windy City for another wonderful Pricing Conference event. We were thrilled to return to the luxurious Loews Chicago O'Hare hotel, the host location for all of the Pricing Workshops, Keynotes, Breakout Sessions Town Hall events and more. On Tuesday and Wednesday, we welcomed pricing practitioners from across the country for two, full days of Pricing Workshops. Building on the lessons learned, attendees had the option to pass the quiz in order to receive Certified Pricing Professional (CPP) Credits toward their designation.       Attendees heard from dynamic Keynote Presenters on the Pricing Conference days Thursday and Friday, absorbing important pricing strategies and ways to capitalize on existing business models. Another highlight was the return of the Town Hall Sessions. This exclusive opportunity gave practitioners more time with our expert presenters and a deep-dive into their action plans. During the evening there was time to explore the beautiful city of Chicago, dine at the delicious restaurants around the Loews Chicago Hotel, and of course, interact with the PPS Team. We had a blast - and have the photos and hashtag traction (search #PPSCHI18 across social media platforms) to prove it!

View the growing Photo Gallary on our Facebook Page by clicking the image below:

Stay tuned for the official video releases featuring Keynote presentations, a peek into the Sponsor Hall and the attendee interviews coming soon!

Don't miss the upcoming Fall Pricing Workshops & Conference event in Dallas, TX!

Click the image below to learn more and register your team to attend today! Continue reading

Revenue Management KPI's - PricingChat Recap

We held a #PricingChat - a live chat on Twitter - with pricing expert Avy Punwasee to gain insight on Revenue Managment KPI's. Peter Drucker said, “what gets measured improves.” It’s a simple concept that becomes infinitely more complicated when dealing with revenue management. In our experience, regardless of being B2B or B2C, most pricing metrics are underutilized. The lack of visibility and active management leads to lost sales and profit. In this #PricingChat with Avy Punwasee, we answered questions about revenue management KPIs that every organization needs to evaluate. About Avy Punwasse: Avy Punwasee is a founding principal of Revenue Management Labs, a boutique consultancy dedicated to realizing sustainable bottom line improvements through developing and executing innovative pricing strategies. With over 15 years of senior experience spanning pricing, strategy, and analytics, Avy has transitioned from being an in-house practitioner with large companies such as Anheuser Busch InBev, Ford Motor Company etc. to consulting for leading global companies.

View the full recap of the chat below:

Click the image to learn about the 29th Annual Fall Pricing Workshops and Conference event in Dallas, Texas and hear more on this topic in person! Continue reading

Service Pricing Success Feat. Cliff Isaacson of Syncron

Service pricing is a key factor to success in after-sales service. Using the proper pricing strategy is a sure way to improve service pricing, so we partnered with Syncron to learn from an expert. We're proud to share insight from Cliff Isacson, Director of Pricing Solutions at Syncron, in this special blog post! But first... a bit about the author.

Cliff Isaacson:

Cliff Isaacson joined Syncron in 2018 as Director of Strategic Pricing. His specialties include technology product management, applied pricing and inventory optimization, analysis and operations research, enterprise software marketing and sales, SaaS, customer integration and technology implementation. Cliff earned his BS Computer Science from Northwestern University and MS Industrial Administration from Carnegie Mellon University.

Read the first part of Cliff Isacson's article, as found on the SYNCRON blog, below.

People inherently understand the value of good service. Who can forget a trip to Disney or a stay at a world-class hotel – their first truly outstanding experience where customer service went above and beyond? But who also remembers a truly bad service experience – whether it was heard from a friend or seen as a viral internet joke? The adage still holds true: one bad customer experience can negate the value of ten good experiences.

Price is a key success factor in service, particularly in after-sales. If you have ever had your car or computer repaired by the company you bought it from, then felt the frustration of finding the same repair service for a significantly lower price at another repair shop, then you know how important price can be. It can impact your loyalty to the brand, future purchases from them and your consideration of other options for future repairs and service. But it isn’t just anecdotal examples of service experiences that show the importance of good service. Service has become an increasingly important source of revenue and growth for manufacturers. Industry studies have shown that Original Equipment Manufacturers (OEMs) average 25 percent earnings before Income Tax (EBIT) on service, versus the 10 percent for new equipment. A Bain & Company benchmark survey even showed that service contributes an average of 22 percent of total revenue, but an average gross margin of 39 percent! Service revenue is expected to double by 2020, rapidly turning it into a growth engine for manufacturers and a source of revenue stability.

So, why do so many industrial goods manufacturers underinvest in service pricing?

I’ll admit, service pricing can be a complex problem to solve. Manufacturers need to manage a large assortment of parts across a broad spectrum of fast movers and slow movers, commodity parts and complex replacement equipment, unique OEM parts and simple parts available from multiple vendors. Then, there’s the added complexity from pricing across regions, channels, markets, customer types and a value chain that can span all the way from corporate, to the dealer network, to end customers. The traditional approach to pricing is a cost-plus methodology, a model that applies a markup after a part’s cost is determined. OEMs frequently hesitate to increase prices on these parts, given their already high margins compared to their finished goods, leaving behind untapped revenue and margin. High volume parts with lower negotiated or manufacturing costs end up with a lower price, frequently resulting in underpricing and lost margins and low volume parts with higher manufacturing costs get a higher price, resulting in greater competition. This paradox creates a self-fulfilling cycle of high prices and low sales, driving dealers and consumers to lower-priced after-sales substitutions, and OEMs to underprice services to drive part sales. A better pricing approach uses a value-based pricing methodology that considers the unique aspects of service parts. A McKinsey study recently recommended expanding OEM after-sales lifetime value by re-pricing spare parts more dynamically. With this data-based approach, OEMs can achieve 3-10 percent EBIT margin improvements from better pricing for the long tail of a service parts assortment – supported by an incredible 80% of service champions that employ value-based pricing models. To truly understand value-based pricing for service parts, it’s crucial to understand the differences in product lifecycles between service parts and finished goods. For an in-depth look at both typical product lifecycles and the associated service pricing, Cliff Isaacson shares more in the second published post on the Syncron blog!

Read the FULL SECOND - HALF HERE!

  Cliff Isaacson is a featured #PPSDALLAS18 Breakout presenter during our Spring Pricing Workshops and Conference event in Dallas, Texas!

(CLICK the image to Register)

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Tips To Improve Retail Pricing Management

One of the most difficult, yet key factors to successful business models is pricing. Retailers struggle to find the right balance between optimizing profits and maintaining traffic. There is a science to crafting a sound Retail Pricing Management strategy. Strategies must ensure retail businesses are well positioned to compete, so... tie the price to the value. Always. While companies should make price part of the offering, the prices must allow for competition within the market, not with the lowest price, which is easy, but with a good price that makes sense by allowing you to make the profit without killing volume. Our friends at Pricing Solutions tapped expert Fred Puech, director of pricing research and analytics to share four impactful strategies that will improve retail pricing management. Learn sustainable pricing strategies that develop healthy margins and good traffic. READ THE FULL ARTICLE from Pricing Solutions HERE. Continue reading

The Pricing Virtual Summit 2018

Announcing the PPS Pricing Virtual Summit Event! The PPS Pricing Virtual Summit brings leading pricing executives to speak directly to pricing professionals in real-time for real results!

Whether you’re looking for tactics on how to lead a Digital Transformation, develop a compelling pricing strategy around Artificial Intelligence, or use analytics to find hidden profits, find the resources in our Virtual Summit.

This 1-day event spans several hours so experts can deliver proven pricing strategies and case studies from their most successful campaigns! Learn actionable steps that will work in a business right now.

Learn more about this exclusive offering for Pricing professionals by clicking HERE.

Watch a clip of #PPSSD17 Keynote Speaker Laura Preslan of Microsoft deliver a soaring presentation:

Click the link BELOW to access the BONUS Presentation Slides from Laura Preslan's Keynote Speech!

Laura Preslan Presentation Slides #PPSSD17

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