Setting prices
Setting prices
Hi all, just about to do our first tester week with some friends of ours staying in our new holiday let to be a critical friend. I need to set the weekly/weekend rates so we can start marketing it after they have stayed but not really sure how to set them. Is there any kind of formula you use, guess work (surely not??) or what? I have trawled the local offerings around here and there are so many variations on charges, I just am not where to pitch in at! Help!!
Re: Setting prices
If you are confused, imagine what your prospective guests must go through !Greenacre wrote: I have trawled the local offerings around here and there are so many variations on charges, I just am not where to pitch in at! Help!!
'Id suggest you keep it as simple as possible. Start out slightly high, include all extras, keep it simple and adjust a couple of times a year as you get feedback from enquiries.
** Richard
PIMS: Holiday Rental Management system
They say we learn from our mistakes. That makes me a genius !
PIMS: Holiday Rental Management system
They say we learn from our mistakes. That makes me a genius !
Greenacre there are so many factors involved - location demand, quality of furnishings, décor, facilities, is the cottage detached, modern, old, rural, central town location etc, etc....
Unless you own a park property, for example, where they are all the same, then the rental ceiling will only be proven by trial and error. I would look at what other similar comparable properties are charging and pitch somewhere in the middle. Too cheap can put people off just as much as too dear. I opened a new cottage in August 13 and I'm still adjusting my prices upwards and still increasing bookings. It takes a long time to get it right.
Unless you own a park property, for example, where they are all the same, then the rental ceiling will only be proven by trial and error. I would look at what other similar comparable properties are charging and pitch somewhere in the middle. Too cheap can put people off just as much as too dear. I opened a new cottage in August 13 and I'm still adjusting my prices upwards and still increasing bookings. It takes a long time to get it right.
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French Cricket
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Yes to what they all said! Price setting is an art rather than a science - it needs a good bit of research to begin with, followed up with a healthy dose of intuition, a belief in what you're offering (and the ability to sell the experience to prospective guests) and a very large spoonful of courage!
I take the view that it's important not to start off too low - people are more put off by 'too cheap' than 'too expensive', and if you price cheap you'll get the guests that go with it! When we set our prices 5 years ago, we found that the vast majority of other accommodation here was very low priced (and for good reason
). We could have decided to enter that same market and compete on price ... but we didn't - instead we priced high. We're still the highest priced accommodation for couples in the Ariège, but right from the first year we've booked solidly. We also have one rate which doesn't change through the seasons, which hasn't in any way put people off. So the point really is to find your conviction and go with it. If you get it wildly wrong you can always adjust downwards.
I'm looking forward to seeing the photos of your place - it looks as though it'll be lovely. I got all excited when your site invited me to read your blog, then a bit deflated to find only two posts, written on the same day! Something to look at, maybe?
PS It's a long time since I heard someone else talk about a 'critical friend'! Took me right back
I take the view that it's important not to start off too low - people are more put off by 'too cheap' than 'too expensive', and if you price cheap you'll get the guests that go with it! When we set our prices 5 years ago, we found that the vast majority of other accommodation here was very low priced (and for good reason
). We could have decided to enter that same market and compete on price ... but we didn't - instead we priced high. We're still the highest priced accommodation for couples in the Ariège, but right from the first year we've booked solidly. We also have one rate which doesn't change through the seasons, which hasn't in any way put people off. So the point really is to find your conviction and go with it. If you get it wildly wrong you can always adjust downwards.I'm looking forward to seeing the photos of your place - it looks as though it'll be lovely. I got all excited when your site invited me to read your blog, then a bit deflated to find only two posts, written on the same day! Something to look at, maybe?
PS It's a long time since I heard someone else talk about a 'critical friend'! Took me right back
All I can add to the above is the full week v weekend or midweek split.
Aim to price a weekend (max 3 nights) or midweek (max 4 nights) at about 70-75% of a full week. Short breaks are really good marketing; the number of guests we get who come for a short break and return for a full week is high.
Oh, and work out your changeover costs (again not easy with no experience) and remember your own time has to be costed in, then make sure you're never selling at a rate that doesn't give you a good margin of profit over the costs. Amazingly, some hobby owners let at a loss but don't know it.
And finally - never, ever undersell your business, and avoid bargain hunters who will try and beat you down. Contrary to popular belief (not amongst owners) it is often better to leave the property empty than to let it at a stupid price to someone who'll treat it in accordance with what they've paid, and then expect to pay the same another time.
People respect quality and will pay quality prices for what they can recognise as good value.
If you're going to offer "just opening" reduced rates at the start, make a big deal of it so people know they're getting an opportunity to stay at below what the proper going rate will be when they choose to return IYSWIM
Aim to price a weekend (max 3 nights) or midweek (max 4 nights) at about 70-75% of a full week. Short breaks are really good marketing; the number of guests we get who come for a short break and return for a full week is high.
Oh, and work out your changeover costs (again not easy with no experience) and remember your own time has to be costed in, then make sure you're never selling at a rate that doesn't give you a good margin of profit over the costs. Amazingly, some hobby owners let at a loss but don't know it.
And finally - never, ever undersell your business, and avoid bargain hunters who will try and beat you down. Contrary to popular belief (not amongst owners) it is often better to leave the property empty than to let it at a stupid price to someone who'll treat it in accordance with what they've paid, and then expect to pay the same another time.
People respect quality and will pay quality prices for what they can recognise as good value.
If you're going to offer "just opening" reduced rates at the start, make a big deal of it so people know they're getting an opportunity to stay at below what the proper going rate will be when they choose to return IYSWIM
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barbersdrove
- Posts: 985
- Joined: Thu Mar 18, 2010 7:48 pm
- Location: crowland south lincolnshire
People respect quality and will pay quality prices for what they can recognise as good value.
That took me a while to realise but it's so true so don't undersell yourself. If you have a good quality product stand by it and price accordingly. and don't be quick to discount. If they want to pay less they can go to a lesser quality place.
Good luck.
A cream cake a day keeps the wrinkles at bay:)
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charles cawley
- Posts: 1205
- Joined: Tue Sep 21, 2010 1:53 pm
- Location: Herefordshire, Shropshire, Borders
Yes, there is a formula.
I can send you an excel spread sheet that does the work for you. There is a screen shot of the system at the bottom of this page:
http://www.holidayletsforsale.com/advic ... and-rents/
We advise owners to start of a little lower than they may feel is right and work rates up to meet the market. This way you may lose a little but it is much better than over pricing and losing out.
Do not take advertised rates of other cottages as a guide. In the UK since the appalling weather of 2012/3 and the floods last year radical discounting is a common practice.
Haggling is now commonplace and many owners will privately cut rates by as much as 35% but you can be sure very few openly admit to it.
I disagree with French Cricket "people are more put off by 'too cheap' than 'too expensive." People like a bargain and if they see one they will take it. Although not in French Cricket's case, I have heard it used more than once by 'helpful' established cottage owners to minimise competition. Do not rely on local advice alone, it is far better to go in low and ratchet up to meet the market. Bunny is right, it does take quite a bit of time to get it right but the important thing is not to sit around with no guests as you painfully edge rates down to meet the market.
Try not to go too close to optimum rates because the market can move against you and leave you tumbling over the cliff edge if you get too close. This hit large numbers of owners in 2013 in the UK. Many paid dearly for their refusal to take a couple of steps back.
In our area the good news is that demand is recovering.
I can send you an excel spread sheet that does the work for you. There is a screen shot of the system at the bottom of this page:
http://www.holidayletsforsale.com/advic ... and-rents/
We advise owners to start of a little lower than they may feel is right and work rates up to meet the market. This way you may lose a little but it is much better than over pricing and losing out.
Do not take advertised rates of other cottages as a guide. In the UK since the appalling weather of 2012/3 and the floods last year radical discounting is a common practice.
Haggling is now commonplace and many owners will privately cut rates by as much as 35% but you can be sure very few openly admit to it.
I disagree with French Cricket "people are more put off by 'too cheap' than 'too expensive." People like a bargain and if they see one they will take it. Although not in French Cricket's case, I have heard it used more than once by 'helpful' established cottage owners to minimise competition. Do not rely on local advice alone, it is far better to go in low and ratchet up to meet the market. Bunny is right, it does take quite a bit of time to get it right but the important thing is not to sit around with no guests as you painfully edge rates down to meet the market.
Try not to go too close to optimum rates because the market can move against you and leave you tumbling over the cliff edge if you get too close. This hit large numbers of owners in 2013 in the UK. Many paid dearly for their refusal to take a couple of steps back.
In our area the good news is that demand is recovering.
No web-site for now.
Advice about holiday letting
Advice about holiday letting
Not wanting to stated the obvious, but you can always invite agency reps out to look around the property and advise you about prices you are likely to acheive - it's a bit like having a few estate agents out to value your house.
To be polite, you will need to "interview them" with a view to using their agency but they will often be able to give you helpful information about the local market as well as useful feedback on your cottage.
They will be able to give you a good indication of your expected rental prices over the seasons. You can then consider whether or not you agree, and where you would want to pitch yourselves in the price range.
At the end of the day if you then decide to go it alone, you are quite entitled to. We did have an agency when we first started out as I wouldn't have had a clue what to set prices at. Now I manage everything myself.
To be polite, you will need to "interview them" with a view to using their agency but they will often be able to give you helpful information about the local market as well as useful feedback on your cottage.
They will be able to give you a good indication of your expected rental prices over the seasons. You can then consider whether or not you agree, and where you would want to pitch yourselves in the price range.
At the end of the day if you then decide to go it alone, you are quite entitled to. We did have an agency when we first started out as I wouldn't have had a clue what to set prices at. Now I manage everything myself.