I’ve made myself clear before about how I feel about discounting. It devalues your brand and ultimately brings down your profits. If you want to get into more detail about why I don’t think discounting is a good idea, head over to this article. But what other ways are there to offer pricing models outside of the stock standard peak, off peak and discount model? I’m glad you asked, let me introduce you to something I refer to as ‘Dynamic Pricing’.
Dynamic pricing is a model that considers more than just your high and low season. Any accommodation owner can agree that during your normal business practice that seasons aren’t a simple black and white-up and down. Taking my own business as an example, we have ups and downs over our high season and ups and downs over our low season. During our high season, it’s summer and we might have local events taking place that drive accommodation rates through the roof. But we also have things we can’t control – like bad weather – that can drive our accommodation numbers through the floor.
A dynamic pricing model will take extra factors like those mentioned and incorporate them into your pricing. By taking away the mentality that you have a peak and off-peak rates, you maximise the potential of every bit of the business that you offer and maximise your earning potential. If you take your off-peak rate as your base rate then you can increase or decrease to this base as factors that impact your clients thought processes on accommodation as they happen.
I can already hear your thoughts rolling around, and I agree, I don’t want to monitor the weather or go to every community board in my town to know when these factors are going to hit me. And I don’t even know all the factors that can impact my business. Very true, but there is one place that does know these impacts – the Internet! Plugging into the Internet and setting yourself up simple things like google alerts to warn you in advance of the factors that can impact your booking rates can allow you to create a dynamic and responsive pricing model that allows you to maximise your profits at key points, during both your traditional peak and off-peak seasons.
The wonderful thing about the world we live in is that there’s a wealth of information available to use in a way that benefits your business. Plugging yourself into this and your pricing model, and breaking free of traditional methods, will only drive your profits up and allow you to create a business that takes full advantage of what you can offer to clients. There are better ways to maximise your accommodation bookings than chopping your profits up. You just have to take that first step and investigate how you can make it work.