Undercharge or not

[Happylady]

Hi, am meeting up with potential caretaker/changeover organising lady next week. She's been in the business for ages and rents out her own properties too. Had a long discussion with her about what our apartment will contain and have been told that we're appealing to the high end of the market. On discussing prices I'd expected to have to go into it not too expensive to encourage visitors but have been advised that we should not do that as we're likely to attract guests who may not look after things properly.

Would appreciate your views on this.

[Hells Bells]

I completely agree with her. Also, price too cheaply and the high end of the market will think there is something wrong with the place, and all is not what it seems. Charge a competitive price from the start and instead of cutting the price add in some 'extras' to attract new clients.You can always lower it later if the bookings don't come in.

[Moliere]

Also agree. In eight very successful years of renting, we aimed at the top end of the market and I always made sure we were the most expensive property in the area.

I've posted on this subject numerous times before (no doubt Big Sis will turn them up!) but it's all about managing expectations - if people see your place is top-dollar they are predisposed to believe it's the best one (even if it isn't, though it's still got to be top-end). That way, yours will be the one they really want to book, even if they have to stretch a bit.

Elementary, my dear Freud.

Mols

[Sue Dyer]

Pro rata we are the most expensive (or as expensive) in the village. (Touch wood) we have had the most bookings the last couple of years. I've around 12 for this year and a couple of my cheaper competitors have 1 or zero bookings. i.e Agree with Mols!

[Marks]

Agree with what's been said. I am the highest priced apartment in my area, up to 35% more expensive, yet my bookings go up each year.

[greenbarn]

+1

Ask yourself this question: What reasons do I have for selling my product (in this case your holiday rental) for less than it's worth? What will the short and long term effects be?

There's no doubt that the first year is tough; no repeat/recommendation business (although you may well pick up some guests who choose to return in the same year, particularly if you're offering short breaks), less established in a competitive market, etc etc. IF you want to try and entice guests with a lower initial rate, then make a big deal of it; set your rates where they should be and then maybe offer a reduction for your first X number of bookings or something similar - make it special, and obvious that it IS special, don't give out the wrong messages.

But I'd suggest that initially the biggest hurdle to overcome is exposure (and I don't know of a magic solution to that one) rather than needing to compete by undercutting on price; once potential guests find your property, if they like it and it suits their needs then they'll pay the realistic rate. As word spreads, it'll get easier - but the word you want spreading is how great your property is and how it's worth that bit extra, not what a cheap deal somebody got.

Mols is right; people's beliefs are that they don't expect quality to be cheap, and if something's cheap it isn't quality.

[Sue Dyer]

Here is a saying by the now famous Lily (my lovely mam):

Buy cheap buy twice

[kendalcottages]

Another one in favour of all the comments above.

Bear in mind also that if you start with low prices and then hike them up significantly each year to the sum you originally aspired to, repeat business may be harder to come by. Your earliest guests might be put off by the prices hikes. Better to start as you mean to go on.

[Sue Dyer]

Just a thought. If you pitch your rates high/reasonable then as long as the place is worth it you will get that. If not, you have room for negotiations. Start at a knock down price and you feel you need to reduce then is it worth it?

[wallypott]

I am the most expensive in the village at the beach house, where I am not on site. When we let at full whack we rarely get problems. I have consistently been disappointed by anyone I give a discount to, except one German family.

At home we are more in the cheap and cheerful range, but I am on site.

[greenbarn]

I have consistently been disappointed by anyone I give a discount to

How many times have we heard that? It comes up as one of the strongest arguments against underpricing and discounts, yet it's probably the one you wouldn't even imagine without the combined experience of the people on LMH. Caveat vendor!

[Happylady]

Thank you for so many comments. Am going to act on your advice and go high.

I had thought by starting off a bit cheaper and then going higher next year might put off potential repeat bookings and its useful to see that other people also think the same way.

Thank you.

[la vache!]

I have consistently been disappointed by anyone I give a discount to

How many times have we heard that? It comes up as one of the strongest arguments against underpricing and discounts, yet it's probably the one you wouldn't even imagine without the combined experience of the people on LMH. Caveat vendor!

I haven't been disappointed but I only give discounts to nice people.

[Unibond3]

Hi

I think the case for not underselling yourself has been well-made - and indeed is one I also support.

Don't forget though that a crucial ingredient in securing bookings for a higher end property will be the way you portray it.

You'll find that people react with an emotional response when first landing upon your advert or home page - either 'wow' or 'no'. Thereafter they look for logical information to justify their gut response. So a higher price will simply justify their instinctive impression that yours is a quality property.

So, I'd recommend investing in a professional photographer. They'll know how to take an interior photo that not only leaves nothing in shadow but also shows the sky or greenery or whatever can be seen through the windows. They'll know how best to dress a property - and take photos at the most appropriate time of day.

You'll get what's known in the business as 'the money shot' an image that'll ensure people view the rest of your site, where they'll be reassured by the details of the facilities you are offering. That's the one people see first whenever they arrive on your website. Flaunt it!

Also, if you are interested, I'd be happy to send you (or anyone else interested) an advice sheet on preparing your property for a photo session. Just let me know.

Good luck!