Hospitable's Dynamic Pricing utilizes data analysis from multiple sources to optimize your nightly rates based on multiple factors specific to your property and market. This article explains how we calculate both your base price and the adjustments that create your final nightly rates.
How We Calculate Your Base Price
Your Base Price serves as the foundation for all dynamic pricing calculations, and it's what adjustments are added to and/or subtracted from. The Base Price is tailored specifically to your property and changes over time based on:
Property and Market Characteristics
Physical attributes: Unit type, number of bedrooms and bathrooms, maximum number of guests
Location factors: Your property's specific area, neighborhood, and proximity to attractions
Amenities: Parking, pools or unique views, for example
Fees: Such as a security deposit, extra guest fee, and/or cleaning fee
Performance in the market: Your property's historical performance, as well as that of the market
Guest experience: Your aggregate guest review score
Various other factors
Price Adjustment Factors
Once your Base Price is established, several independent adjustment factors are calculated and applied.
What Are Price Adjustments?
Adjustments are added to or subtracted from the base rate based on various changing factors:
Local demand: Higher interest in your area due to local events, holidays, occupancy, and other seasonal trends will command a higher rate
Seasonality: Accounts for high and low seasons in your specific market
Booking window: Modifies rates based on how far in advance guests are booking
Day of week: Typically prices weekends higher than weekdays, based on your market's patterns
Gap nights: Reduces pricing for hard-to-fill gaps between your reservations
Restrictions: Adjusts pricing when recommendations go below your minimum price or above your maximum price
Special Considerations
Property Uniqueness
If your property is particularly unique:
The system will still provide recommendations based on the closest comparable properties
You may need to set a custom Base Price or make more manual adjustments initially
As booking history builds, pricing will become more tailored to your property
New Properties
For properties with a limited booking history:
We rely more heavily on market data and property characteristics
Initial pricing may be more conservative to help establish booking patterns
As you build booking history, the system will fine-tune your pricing
You may choose to set a custom Base Price as the system learns more about your property.
Market Coverage
Our Dynamic Pricing system has extensive data coverage across most markets around the world. However, there are a few limited exceptions:
Some markets may have limited data, resulting in more generalized recommendations
Certain locations (like Cuba and some remote areas) may not have sufficient data for dynamic pricing
How Often Dynamic Prices Update
Prices are updated daily
Additional updates occur when you make changes to your property settings
Significant property changes trigger immediate recalculations
By understanding how our Dynamic Pricing system works, you can better interpret its recommendations and make informed decisions about when to adjust your strategy.