Maximizing Revenue With Dynamic Pricing Strategies for Vacation Rentals

Industry Insights, Property Manager Tips
Maximizing Revenue With Dynamic Pricing Strategies for Vacation Rentals

Experts project that the vacation home rental industry will reach $19.77 billion in revenue in 2024. That’s BIG business. So how can your property management business take full advantage of this revenue potential?

One of the first duties of a rental property manager is to set a pricing strategy. Each property has different features and amenities. Your rental rates must be substantial enough to generate profits but reasonable enough to attract visitors.

When deciding on flexible pricing for a short-term rental, a popular and effective strategy is dynamic pricing which allows rental managers the chance to set rates according to distinct criteria.

What Is Dynamic Pricing?

Dynamic pricing is an approach for optimizing rental revenue based on certain property facets and market data. As with hotels and motels, vacation rental managers set their prices based on several important factors, such as:

  • Seasonal demand
  • Competitors’ rates
  • Specific property demand
  • Room and unit supply
  • Search volume
  • Weekly rental patterns
  • Upcoming area events
  • Booking lead time
  • Property amenities and characteristics

Using research and dynamic pricing tools, vacation rental managers arrive at fair prices to cover operation costs and turn a profit.

Dynamic Pricing Benefits

Dynamic pricing benefits rental revenue and guests’ vacation experience. An effective vacation rental pricing strategy offers property managers a few advantages:

  • Higher revenue and lower expenses
  • Better customer experience
  • Optimized rates for peak seasons
  • Fair prices for off-peak times
  • Keeping pace with competitive rates
  • Quicker response to changes
  • A broader range of customer demographics
  • Enhanced reputation

Elements That Affect Dynamic Pricing

Several factors affect how managers calculate dynamic pricing, including:

  • Seasonal or annual events
  • Guest demand
  • Typical weather conditions
  • Booking lead time and turnover
  • Competitors’ pricing methods
  • Rental property reviews and ratings

While some of these aspects are out of managers’ direct control, there are many components they can change to arrive at fair prices. 

Dynamic Pricing Strategies

Rental managers have many approaches to dynamic pricing. Here are a few of the most popular and effective strategies for how to price a vacation rental stay.


The most common dynamic pricing strategy considers customer demand for the property. Managers use historical data, experience, and regional insights to set rates. The demand metric is especially effective for managers with multiple rental properties.


Rental managers evaluate how close their vacation homes are to similar properties in the area. This can be beneficial for managers with multiple properties in a single general location.

Banded Pricing

Certain rental properties are more popular than others. In banded pricing (also known as “threshold pricing”), managers set their rates according to the property’s relative popularity with renters. Rates are set for each property type.

Contextual Pricing

Some rental properties are on beaches; others are in park settings. Still others are located in urban areas with lots of events happening. Rental property managers may choose to price their units on these surrounding factors over rental property features.

Time-Based Pricing

Rental demand varies throughout the year. Beachfront properties may be more popular in summer. Urban or suburban rental homes may be more popular over the holidays. Managers can adjust their pricing to take advantage of peak seasons.

Customer-Based Pricing

Managers may offer repeat customers an occasional bargain on accommodations. Alternatively, they can offer first-time customers entry deals and charge repeaters advanced rates. 

Competition-Based Pricing

After being in the game for a while, rental managers need to survey how much their competition charges. If others charge more, you may decide to charge less. If they offer lower rates per day, you may increase rent. (This approach might not be the best for those who are brand-new to vacation rental homes.)

Dynamic Pricing Tools

Rental property managers have plenty of online resources that work as dynamic pricing tools. Some of the most popular dynamic pricing tools include the following:

Beyond Pricing

Beyond Pricing uses an algorithm that automatically sets rates at the best possible price. They charge prices based on three factors: seasonality, established local rates, and the day of the week.


Wheelhouse sets prices according to the same three factors as Beyond Pricing, but it also takes the number of guests, how long they’ll stay, and local events they might attend into account. 


The PriceLabs tool is suited for short-term rental managers looking to improve revenue. Rates are based on seasonality, guest number, stay length, and local events and attractions.

Airbnb Smart Pricing

The dynamic pricing tool of the leading vacation rental platform, Airbnb Smart Pricing, is an all-encompassing pricing mechanism. With their privacy feature, managers can set various prices for customers from different countries.


AllTheRooms uses timing and customer patterns to determine when demand for certain properties is higher or lower. Managers can charge higher rates during times of peak demand and offer deals for off-season rentals.


In addition to dynamic pricing, Hospiria offers a complete suite of services for short-term property managers, including revenue tracking and operational management. 

Dynamic Pricing Best Practices

With all the convenience and functionality of dynamic pricing tools, rental managers must still take certain steps on their own to improve operations:

  • Select the best dynamic pricing tool for your purposes
  • Keep a constant eye on market prices and adjust yours when necessary
  • Set appropriate thresholds for minimum and maximum prices
  • Be creative with marketing – look into promotional specials, package deals, or loyalty rewards programs
  • Make customer feedback a priority, setting up an easy system for reviews and ratings
  • Stay on top of insurance and utilities

By consistently and faithfully following these steps, you’ll be more prepared to compete at a meaningful level.

Whatever You Charge, You Also Need Insurance

Safely makes it easy for property managers to get commercial short-term rental insurance. Safely integrates fully with the top property management systems making it a breeze to cover every reservation. We offer protection against liability for damage and injury and cover you for damage caused by guests, both accidental and intentional. To learn more about Safely, vacation rental management, and insurance, call us or contact us via our online sales page.

Safely’s Short-Term Rental Protection

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Grace is the Chief of Staff at Safely and a licensed insurance agent. She began her journey at the company over a year ago in the Customer Happiness department, where she learned the ins and outs of the customer experience, getting to know Safely’s customer base and exploring Safely’s value proposition in the market. Grace was asked to step into the Chief of Staff role in 2023 and spends her time working on company-wide initiatives including investor relations, compliance, and expansion. Outside of working hours, you can find her trying new restaurants with her husband, walking her dog along the river, and exploring the city of Atlanta.

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