Knowing how to price your holiday let can be a challenge as there is so much to consider. If you price your property too high, you run the risk of bookings being slow and your accommodation falling short of guests’ high expectations. Price your holiday let too low and you may not be able to reach your profit goals or could leave potential guests questioning the standard of your property.

Whether you are just starting out or a seasoned pro looking to refresh your rates, read our ultimate guide on everything you need to know as a holiday let owner. These tips will help you maximise your profits and bookings. 

How To Price Your Holiday Let

Looking for something specific? Use the quick links below. If not, read on for a full guide on how to price your holiday let:

• Different pricing strategies

• Holiday let running costs

• Essential advice on pricing your holiday let

• Mistakes to avoid when pricing your holiday let

• When to adjust your prices

• How can Cornish Cottage Holidays Help you?

What are the different pricing strategies you can use for pricing your holiday let?

There are several different pricing models you can use when it comes to pricing your holiday let. Take a look at them below:

• Price per night: One of the most common pricing models you will come across is price per night. This is a fairly straightforward model and is one of the easiest strategies to apply and manage.
• Length of stay (LOS): This pricing strategy is perfect for keeping your revenue targets on track whilst also making your guests feel rewarded for staying for longer. With the LOS model, you can offer a slightly discounted rate for longer stays. 
• Derived pricing or price per guest: This pricing model is great if you want your prices to change depending on the number of people staying. With this model, you create a basic rate and then add on a surcharge depending on the number of guests. 
• Special offers: Special offers really help boost bookings and can be implemented in many different ways. Some examples of this type of pricing strategy can include ‘early bird’ discounts, ‘last-minute’ deals, and promotions such as ‘get five nights for the price of four’.

Pricing your holiday let: Running costs

A major factor at play when looking at how to price your holiday let is your running costs. There are several different running costs you need to take into consideration and they can be split into two categories; variable running costs and fixed running costs. 

Variable Running Costs

These relate to the costs you will incur each time a booking is made. This means that the more bookings you have, the higher the costs will be. 

Examples of variable running costs include marketing, holiday letting agency fees, turnaround costs such as laundry and cleaning, welcome gifts (if this is something you want to provide), and more. 

Fixed Running Costs

These relate to the costs that are unavoidable, whether you are busy or not. Examples of fixed running costs include holiday let insurance, business rates, general maintenance, and mortgage interest rates. 

These costs need to be factored into your financial planning as they will help you understand and ensure that your holiday let is a profitable venture.

Read more about holiday let running costs on our blog.

Essential advice to follow when pricing your holiday let

Pricing your holiday let is a crucial aspect of maximising your rental income and attracting guests. Here are our top 5 essential pieces of advice to follow when pricing your holiday let:

Look at your running costs

The very first step in working out how to price your holiday is to work out all your running costs and expenses. These costs are likely to include:

• Mortgage
• Holiday letting insurance
• Household bills such as electricity, water, and gas
• Property maintenance
• Advertisement and marketing
• Holiday letting agent fees
• Cleaning and laundry costs

Once you’ve worked all these out, you’ll be able to see what your break-even point is. This is the rate you do not want to go lower than.

Do your research

After working out your break-even point, the next step in pricing your holiday let is to perform market research. This means analysing the prices and availability of your competitors or other holiday lets in your area, thinking about your ideal guest and whether your property fits into their expectations, and taking your holiday let’s location into account.

Are you finding this to be a daunting task? Leave this up to your holiday letting agent. Here at Cornish Cottage Holidays, with our knowledge of the local holiday letting market, we can give you advice on how to price your holiday let without having to spend hours performing market research yourself.

Seasonal and midweek pricing

Seasonal pricing is important when pricing your holiday let. Rates should be higher during peak seasons such as school holidays, annual bank holidays, and seasonal events (Christmas and Easter). This is because the demand for accommodation increases. Off-peak times may require lower pricing to attract guests as accommodation is less in demand.

Value-added amenities

Consider any unique features in your holiday property. From log burners and hot tubs to swimming pools and enclosed gardens, these features are added benefits that potential guests would pay more for. They also make your property more appealing.

Special offers

Lastly, consider whether you can run some offers on your holiday let property without compromising your profits. For example, you could also a small discount for longer stays of two or more weeks. 

Other offers you could run are early bird rates if your potential customer books again for the following year or books far in advance. If you have a minimum booking stay of 3 nights, why not reduce it to two-night stays when you need to fill gaps in your calendar? 

You could also consider having a lower occupancy rate. An occupied holiday let (that sleeps 6) with few guests is better than an unoccupied property.

Pricing holiday lets: Mistakes to avoid

Using a holiday letting management company like Cornish Cottages Holidays will help you avoid some common pricing mistakes. Here are the top 3 mistakes to avoid when pricing your holiday let:

Underpricing

Why it’s a mistake:
The most common reason people end up underpricing their holiday let is because they haven’t accurately calculated their overheads and running costs. Even if you have, pricing below or on the break-even point is not enough. It also doesn’t make for a strong long-term business. After all, you want all your hard work to be worth it. Underpricing can also give the impression that your property is of a lower quality than its competitors.

How to avoid making this mistake:
Conduct thorough market research and add up your overheads/expenses at least twice to make sure your break-even point is correct. Don’t be afraid to charge competitive rates that reflect the value, location, and added extras of your property. 

Overpricing

Why it’s a mistake:
Overpricing your holiday let can lead to fewer bookings meaning your property has longer vacancy periods. Higher prices could mean you push your potential guests to your competitors as their rates are more favourable. 

How to avoid making this mistake:
Be sure to keep your pricing in line with market standards and guest expectations. Don’t price your property exactly the same as your competitors though as every property is unique. You as the owner provide something different to that of another property owner. Regularly monitoring your occupancy and guest feedback will also help you gauge whether your pricing is attracting bookings.

Ignoring seasonal and event-based pricing

Why it’s a mistake:
Failing to adjust your pricing based on seasonal or event-specific demand can result in missed opportunities for higher income during peak times. 

How to avoid making this mistake:
Implement a dynamic pricing strategy that considers seasonal fluctuations, holidays, and local events. Increase your rates during peak seasons and consider offering discounts for extended stays. This approach allows you to optimise your revenue and profit margins.

Owners with Cornish Cottage Holidays can use our Income Maximisation System to optimise income and booking levels. This automatically changes prices in line with customer demand, helping owners to rest assured that their let is always priced appropriately.

When to adjust your prices

There are several times throughout the year when you will need to adjust your pricing. Some of these reasons include:

• School holidays
• Christmas
• Easter
• Bank holidays
• Local events and festivals

Other reasons to adjust your pricing could be simple things like wanting to fill gaps in your availability, offering discounts or promotional offers, or reflecting changes in your competitor’s rates. 

With the current climate, you may also find you need to review your rates often as your overheads/expenses increase. 

Cornish Cottage Holidays are here to help our clients get the best possible income from their holiday cottage. With our industry knowledge, we’re always in the know on current market trends.

If you like, we can optimise your bookings and income with our Income Maximisation system. This quickly changes your pricing in line with customer demand and earns you more by ensuring that prices change the right amount, at the right time. We offer 4 levels of Income Maximisation, all with different degrees of price flexibility, meaning you can still keep control of your holiday let’s pricing if you’d like to.

How can Cornish Cottage Holidays help you?

Here at Cornish Cottage Holidays, our team of local, friendly experts can help you by discussing all your revenue management options to make sure you’re making all the right decisions. We understand that every holiday let business is different, so we tailor our services to suit your specific requirements. 

Our industry-leading revenue management system allows us to monitor trends, alongside property performance, in order to adjust each property’s weekly rental price throughout the year. This means we can maximise bookings and income by changing prices quickly in response to fluctuating customer demand.

Give us a call on 01326 336773, email enquiry@cornishcottageholidays.co.uk or visit our website for a free, no-obligation appraisal of your income and booking potential.

Looking for more useful advice for holiday home owners? Read our post on marketing your holiday home, or visit our owner blog page.