How to work out what to charge for your holiday let

Working out what to charge for your holiday let can be an absolute nightmare – but it doesn’t have to be. Here we’ve broken down a number of different pricing strategies to consider, and the most important things to think about when you’re setting your prices.

Finding your running costs

First things first; before you can figure out what you should be charging, it’s a good idea to figure out how much you need to charge to avoid losing money.

Of course, you can work out the monthly cost of your mortgage, but don't forget to add on potential costs such as:

• Maintenance work and costs, such as cleaning on changeover days, plus supplies
• Energy bills
• Council tax
• TV licences and media costs (TV packages, internet and phone charges)
• Add in a small buffer for incidentals and unforeseen costs, like replacing furniture or making repairs
• Costs for welcome packages, if used

From there you should be able to work out your minimum running costs per night, week or month, which gives you a great starting point.

Now comes the fun part..

Researching competitors

The next step is to research the competition; it’s one of the best ways to get an idea of what you should be charging for your holiday rental. It gives you both an idea of the prices people are willing to pay to stay in the area, as well as the range of properties available to your potential guests. Choose properties in a similar area with a similar number of beds available, if you can. If you’re struggling to find similar properties in your area, the next best thing is to look for similar areas in the country and see if you can find similar properties there to compare pricing to.

Don’t just look at their pricing – look at their booking calendars. This should give you an indication of the earnings they’re currently making and how popular that type of property is in the area (although be aware that sometimes places can get a lot of bookings last minute, so future bookings aren’t necessarily a full indication of what that property earns).

Be aware that these prices are only an indication of how well the property is doing. After all, a high-end, luxury property may only need two weekends booked per month to break even; whereas a lower cost accommodation could need over two weeks booked before they begin to make money. This is why it’s important to figure out your running costs before setting prices for your holiday let.

Looking at the competition is always a good idea, so you know what your guests will be looking at when deciding where to stay – it gives you a much clearer picture of where you might be in the market, and therefore a good idea of what you might need to charge.

Once you’ve got a good idea of the range of properties, you should be able to get an average amount of what your holiday let should be charging. For the initial few months, it can be a good pricing strategy to offer a discounted rate.

Here’s why.

Use discounted prices for research and to build reputation

Discounts encourage people to book your property over others, and the important thing when you're starting out is to gain some ‘social proof'. Social proof usually consists of reviews, so that future guests can make an informed decision not only based on the information you give but also prior guests who are seen to have an unbiased opinion.

It’s the next best thing to having a friend recommend your holiday let personally; and as such, reviews are paramount in getting you more bookings.

Using discounted rates at the very beginning to encourage bookings can offer you a unique opportunity to gain insights from your guests too; you can offer the discount with the one caveat that the guest must fill in a feedback form at the end of their stay.

Feedback is vital when you have first set up your holiday let; it’s easy to overlook little things when you first setup, so having this breaking in period where your guests know you’ve just started is a great time to fix any little teething issues before you charge your full amount and avoid disappointing guests and getting any subpar reviews – just as a good review can help you gain bookings, too many negative reviews can lose you bookings too.

Seasons

Seasonal pricing is a very common pricing strategy that we'd certainly recommend. During ‘low' seasons, where fewer people are on holiday, it can make sense to encourage bookings by offering lower rates. Conversely, during ‘peak' seasons where your holiday let may be extremely popular, such as during the summer, it makes sense to raise your prices as guests are willing to pay more.

Seasons aren’t simply governed by the weather; often they can be linked in with bank or school holidays, so it’s important to keep an eye on when these dates will appear each year.

It can be a little trickier to manage your pricing this way, but it certainly pays off in both bookings and profits if you do it right. You can contact Click, Book, Stay here for free advice on seasonal pricing your holiday let at any time.

Changeovers and minimum stays

During more popular seasons when you think it’s likely you’ll be booked up, you can usually dictate a minimum stay fairly easily; this ensures a full week (or whatever minimum time you set) is always paid for during those peak seasons, instead of leaving a few midweek days unpaid.

You can, of course, set a minimum stay all year round – the only issue is that if your holiday let is affected by seasonal popularity, you may find yourself with a few weeks where the property remains empty, when it could have potentially had guests for a few weekends.

It can be a bit of trial and error figuring out what works best for your holiday let; but we would recommend at least looking at other properties in the area to see when they are booked in low seasons, or to get some free advice directly from a holiday let agency like Click, Book, Stay.

Local attractions & events

Every place is different, and along with different locations comes different events. Look out for what's going on in your holiday lets location throughout the year; events that draw people from out of town or from further afield can allow you to increase rates, even if it’s simply for one weekend – if the demand is there, you should be able to increase your prices.

You can easily find what’s going on in your area this year by heading online. There are events that may be unknown to you when you first start – for example, annual conferences can book out accommodation in certain areas. In your guest feedback you can ask the reason for their stay, and note it in your calendar for the next year.

Advertising costs

One cost that some people forget to incorporate in their running costs is the cost of advertising your property. This one is rather important – as if you don’t advertise, you won’t make any bookings.

There’s good news though – you can work around this by advertising with an agency like Click, Book, Stay. There’s an initial setup cost, but after that, you don’t pay a thing for advertising. You leave it up to the professionals, and they simply take a percentage of each booking you take. It’s simple to incorporate that percentage into your running costs – and then you can leave everything else up to them.

What’s more is, if you need to make a price change, they’ll do all of the legwork for you – they’ll update all your profiles online to ensure the same price change is advertised on TripAdvisor, AirBnB and anywhere else your holiday let features. They’ll even get in touch if they know of certain events in your area that may warrant a price increase.

Whichever way you’d like to advertise your holiday let – make sure you incorporate your advertising spend into your baseline running costs to make sure you don’t make loss.

Luxury extras

Luxury extras like Jacuzzis and hot tubs can be a great investment for a holiday let; not only can they often increase the amount you can charge for your holiday let, they often increase bookings to your property too.

If you do decide to get an extra like this, you can usually increase your letting charges substantially – but bear in mind, you’ll need to incorporate new costs into your running costs such as:

• Water and chemical changes
• Heating costs
• Laundry costs (if you offer bath robes, slippers, etc.)

Hot tubs aren’t the only luxury extra that you may be able to increase your prices with; you can add saunas, bars, pool tables and even home cinemas to increase the amount you can charge for your holiday let.

Don’t use discounted prices for too long

Discounted pricing is great to attract new guests or when you're experiencing lower booking rates, but don't keep them going for too long. Simply put, if you under-price your holiday let too often, it's much harder to explain the reason for the raise in price later, and returning guests may hold out to book at a discounted rate when they know you often run discounts.

A better idea is to use higher pricing very quickly, if not immediately – it’s much easier to discount later than to raise your prices after all. It also allows you more wiggle room to figure out which prices work for you; as well as making your discounts seem like an even better deal.

Ask the experts

At the end of the day, finding out what to charge for your holiday let is a complex task – it requires a good knowledge of the market, which can change year on year. The best advice is to get a professional on the case – you can get in touch with Click, Book, Stay, Holiday Let Services who have been advising holiday let owners for over a decade, and whose staff have experience far beyond even that!

To get in touch simply contact Click, Book, Stay here or call on 01738 506211 directly.