Utilising Dynamic Pricing for Competitive Prices

Welcome back to a very special episode of the Boostly podcast. In this episode what we're going to do is we are going to fine tune and we are going to optimize a host of Boostly, a client of Boostly, a Boostly team members, Price Labs and dynamic pricing. Live with the founder, one of the co founders of Price Labs, Anurag Verma. Anurag, if you don't know, he's one of the co authors of the book Die Blueprint, one of the co founders of Price Labs and has a fantastic product and we've been working with Cuny Perez based in Orlando and over the course of this year we've been optimizing everything about the business for direct bookings but most importantly to get it bookings because when we first came in the bookings were brassic, there was not many bookings. It just started up last November. January is a bit bare but now thankful to say the property is getting full. Now the property is getting full but there's a reason why and it's not because of the amazing property and not because of the amazing listings but because of how the pricing was set up. And you can argue now because he was ahead of the market, the pricing was too low. So by optimizing Price Labs and by putting in some some real places and we're going to get this optimized live with the founder of Price Labs we're able to to pinpoint some unique things that we can do. We've implemented them and I'm going to be really excited to check back and report back on this later on in the year to show the benefits of this. So without further ado, let me flip the screen. This is a zoom call between me and Mr. Verma of Price Labs. Thank you very much again Anarak for doing this and do go check out Price Labs. P R I C E L A B S I'll leave the logo up here. Go and check it out and make sure that you are optimizing your dynamic pricing for more profit. Okay Andrex, so thank you very much for doing this. We're obviously looking at Escape bookings and Kenny's account here to try and see if we can tweak any, any additional revenue per booking because obviously Orlando, there's a lot of properties down there. It's a very up and down market and in the past Kearney's just had a set rate and obviously when you have a set you miss out on such potential revenue that you could have. So yeah, excited to dig into this. Thank you for doing it. And I'll pass on to yourself and let's see what we can unearth with all this juicy data.

Awesome. Yeah, thank you so much for sharing. Sharing this and getting me on your mark. But getting into this. So this is what QNews would probably see when he logs in any day to Price Labs, right. When I look at this account and his property, just without even getting into the details, just looking at some basic settings, the minimum price and the base price, and some performance metrics, there is one thing that clearly jumps out to me. So two things are happening. His minimum price is 239. He's saying never go below 239. He's in some way set that as his operational minimum price. And then the base price, he's set it as three bucks more than the minimum price. Now base price is sort of, we think of it as on average across the year, across the highs, across the lows. How much would you want to sell at right now if Your base is 242It means that during low season and during low demand periods we would try to go lower but there's not really much room left here. Right. So generally speaking we say there should be at least a 10 to 15% difference between these two numbers. Right. So one of these two numbers has to move. It's either 239 has to go lower or 242 has to go higher. Now which one should move becomes is the question. And in this case it's very easy for me to see. And that's because if I look at his seven day occupancy, it's sitting at 100% comfortably beating the market. 30 day occupancy is like in the upcoming 30 days. How much are you booked? How much is the market booked? Again comfortably beating the market and next 60 day occupancy, again comfortably beating the market. So like there is room in the base price to go a little bit higher because he's doing well. He's like, and this is sometimes like this one, comfortably meeting the market is what you want to see. There are plenty of markets which where the occupancy the next 30 days is in the next seven days is know 40%. And you don't want to be like 45%. Yes, you're beating the market but not by much and there's plenty of room. Like I would rather be like twice as booked rather than be 45% booked. Right. As long as it's coming at a good price. Like it shouldn't be that to be 2x occupied, you're cutting your price by a third and making less money in return. Right, but, but if all three numbers are comfortably beating the market, then I generally say, okay, there's room here to bump it up. We'll see some of that when we dig into the details. So let's go into the property itself. And these are the settings that we had talked about, the minimum price and the base price. And if I click over at, help me choose the base price. Let's see what it says. What you see here is it's saying that we are recommending that the base price be 253. So we're asking like a 5% bump. So not the 10, 15% that I had hoped for, but we are saying, hey, you're performing well enough that you can try bumping the price a little bit up. And what's happening here that we are basically saying you're booking better than the market. And we, we generate these recommendations every, like every week. We are looking at your property and seeing how it's, how it's performing and saying, do you need the base price to be higher or lower? Base price for anyone who, who hasn't been into Price Labs is sort of the key starting point in some ways, which is reflective of the listings, how good the listing is. Pretty much that. And there is a. I've chosen the words very carefully here. I'm saying how good the listing is and not how good the property is. Because you could have a great property and if the pictures are bad, if the copy is bad, if the title is bad and it's not getting booked, then it's a poor listing. And what gets booked by people online is the listing. People stay at the property, people book the listing right. So as the property doesn't change over time, but the listing description might improve and that might be part of it, right? Like that over time, maybe this base price of 242 was fine, but as your property gets, as your listing gets more reviews, as your listing get you improve the copy, improve things, it will start performing better. And as it starts, as it performs better, our system recognizes that and says, hey, look for the same property. Now you're doing better. You should be able to raise prices given how well you're doing. So that base price is an essential starting point for us to say, we recommend one. We show you what the market is starting. The market, surprisingly, is very close to what five and six bedrooms in the location are. This is what he must have chosen in his account already to say this is what I compete against. And again, he's saying he's an upscale property. So he has picked these filters and said, okay, market is at 238. And he picked 242. Now we are saying you can go even higher. You're doing well, essentially. So that's one. Now the reason it becomes important is this listing is in, this property is in Orlando, a little bit away from Orlando, but the Orlando area. And you'll see that for spring break, generally speaking, the prices, like the base price is 242. But most of the spring break, like March is booked. A ton of April is also booked. A lot of the midweek in here is sitting at that 239. It's sitting at that minimum price. And the minimum price, at least for us, is sort of a threshold. It says our algorithm might, might be recommending going a little further down. But you said 239. We are going to stick to 239. And you'll see that what seems to be happening crazily enough is a lot of the dates that are unbooked are sitting at that 239. So if, if he reduces the base price a little, I'm sorry, the minimum price a little bit, there might be a little more activity on those dates that are, that are going unworth. So there might be some room to play there as well, essentially. Does that.

The question I have here so far. Yeah, the question I have is with the base price, obviously the recommended one. But he has to come into here, come into this piece to see it and change it. Is there a way with price labs that the base price will always be set to what your recommended price will be? Is there an automated way of doing this?

Not yet, but coming up later this month is. You know how I looked at all of these numbers and said, I think you should increase the base price. And then I went into there. We will, we will start showing you that recommendation right here and tell you that, hey, even if you don't go it go, there'll be an accept button here to say, yeah, just okay, let's do it. Yeah, nice.

And will that the same thing be there for the minimum price or is that just for the base price?

To start off, we are doing it with the base price, but we also want to do it with a minimum price because they go like so hand in hand together.

With this being said then. So just a very quick minimum price with this being said, when you went into April, you could very clearly and gently See, dates that were available were at the lower price. And you said, well, maybe if we tweak it a little bit lower, just a little bit, it may have a result in booking with something like this. And from what the data is showing you here, what would you say would be a recommended price just to maybe lower it to. Are we talking maybe like a couple of dollars, like what we sort of say in here when it comes to that minimum.

So the, when we talk about the base price, we have this tool that shows you like, okay, upscale, six bedroom, five bedroom whatnot. Now we are talking about specific dates and for those, if you want to get more intelligence on what's happening in the market, we generally say let's go to this neighborhood data tab where we give fairly detailed information about what's happening on each date. Pretty much like how is the market charging on different dates? How is the, how is the market priced on different dates and things like that. So let's look at this. So this red line is the occupancy. So like going until sort of mid April, early April, it's pretty solid. And then it starts falling off, right? This is the market occupancy. And if you look at Cuny's occupancy, even that like these big solid gray blocks are night set of occupied. So like till April 16th he's pretty solidly booked. The market is also doing pretty solidly well. And then there are these periods where things are a little lean and those periods are where the top chart is. Now price, the black line is showing you that the price till April end are pretty high. The prices and then they start going down as occupancy is going down. But this straight line is when they start hitting that, that minimum price. Right? We generally tend to say that when the, the bands that you see behind are sort of the what, what are the market prices. So the pink, the light pink is like the higher end prices. The, the dark pink is sort of the middle band and then the gray one is the lower end. And of course there's, there's some other stuff above on each end as well. Cuny is not singularly higher than everybody else in the market. But what this is showing is we generally say when it is high season, when a lot of things are going to get booked, if you're an upscale property, you want to be up there, but when it is low season or when things are going to be not as booked, you might want to descend into the middle territory. So like the reason is if 90% of the market is going to get booked or 80% of the market is going to get booked. You can be priced a little higher than you would at a normal time of the year and still get booked. Everything is going to go off the market, like almost everything. If you're a good enough property with good reviews on your listing, things are fine.

I was going to say in low season. I was. Sorry, I was just very quickly, I was going to say that if anybody's watching and is worried about that. And there's always a way of getting the price back up per night with upsells. So people do like this. They sort of dismiss upsells really quickly and say, well, make a difference. Or, you know, they, they think, oh, well, you know, if I add an upsell, it's just going to be extra revenue. But if you're going 20 less on your normally rate, that will mean you get the booking. And then as soon as they book, you can then say, would you like our upsell of what? Whatever that would be. And you can mark it up so you can make that money back.

Yeah. One thing I will say is although those dates are sitting at their minimum, they are also a little farther away. And what might as well happen is as the dates get closer, somebody will book those off. So, like, although I'm saying, hey, look, maybe if you want to proactively book, maybe lower it, There is also some level of risk tolerance associated here to say, like, okay, like, maybe I'll hold off till I'm closer.

So here's the next. And I think I know what you're going to do, but is there a way where we're how many days out now? About a month away, so four weeks away from this. Is there a way that we can, with the lower price, can we reduce the rate? And then the closer it gets to that date, then the price then starts to go back up to its normal base price or the normal price that we.

Yeah, there are a couple of things that can be done. Remember, the price is. Minimum price is 239 here.

Yeah.

What. I'm not going to save any of this. But what you could do is you could say, look, let's be okay with 220. Let's say that at 220, if I get a booking, I'm. I'm still profitable. As long as I'm not losing money on a booking, it's okay to take it. Right. But you could say 239 is still sort of some mental threshold or barrier to say, ideally I would want that Right, let's say what you can do is, sorry, wrong place. You can say, if a date is more than two months out, I want that minimum price to be 239. So don't start selling April 2024 at 230 just yet, or even May for 230. But once the date is within 60 days, now use my minimum price of 220. So you can create these two tiers in some ways to say my minimum price can change depending on how far out it is. And same thing with prices themselves. And some of these things are automatically being applied like last minute discounts and occupancy adjustments. So there are things that are automatically in place to say if a date is. So suppose these sets of dates stay unbooked as you get closer and closer, what would happen is that these health numbers will start looking, looking worse. And that in itself, like our base price recommendations, want to see those health numbers be bad for a few weeks to say, okay, we should make a change, like at the drop of a hat. It's not going to say, let's change your base price like suddenly, but what we, what we do have is, is what you. And these are on by default. You can say in the next 15 days, if I'm less than 10 booked for those 15 days, automatically drop the price. Yeah, they are still, they're still going to stick to your minimum price. So like if it's 239 now and it stays unbooked, it's not like it'll go any lower because Your minimum is 239. But if you actually end up changing your minimum to 220, then maybe it'll, it'll drop down gradually. There is, there is some benefit to that from an OTA perspective as well, because when the prices drop for dates that have not booked, they start showing with some promotion or things like that as well. Lovely. Cool.

Lovely. So, yeah, so that's fantastic. So basically we can look at those dates and obviously it's saying here three days were about 94, which is great. But we ideally know that, you know, these dates here are Sunday to Wednesday. It could be after spring break. But we want to get them to be proactive in getting them, in getting them booked. And if we, if we looked at the market data that we did and we saw that, that little line just underneath it was sort of around the 221mark, like, like we said, 220got a mark. If we drop the price to that, then it may proactively get it booked. But we don't want anybody booking that lower price too far out. So if we could change it to say 30 days out, anything booked after 30 days, at least that minimum of whatever it was. But because we want to be proactively booking what could be seen as a slow time, we want to be able to minimum put those dates at that price to get it booked. But as soon as it presses, presses, passes that threshold, then we're sort of doing it at that rate.

Yep. If you want to be like if, if you for whatever reason know that. Hey look, so let me see, we're in April here. Okay, so let's say you say for whatever reason that these dates. I'm absolutely sure this is very low demand. I've seen the data itself not going to book. And you say I want to proactively reduce this one. You could go and say okay, only for this period, make the minimum price to. So you can practically do those things or you can create rules to do those things depending on how far out it is and things like that.

Brilliant.

The other thing that was very curious to me, I guess not, not the right phrase I was very curious about is, is the fact that there seems to be Thursday, Friday, two night reservations here and there are only two back to back. I guess in some ways. But what they mean is that this Saturday night, which generally tend to be in demand, ends up sitting empty here. So I was trying to see like what could be done to avoid this. Because by taking a two night reservation here you have effectively broken down your weekend. You have split your weekend now. Right. Like you could have taken a single weekend booking there and now you don't. And I do see that he has a three night minimum for Fridays and Saturdays. Let's, let's review these settings. Yeah, so what he has done is he said let's do a two night minimum on weekdays and three nights on weekends. And then last minute he didn't actually have to create this rule because it's the exact same rule. It's saying when a night is within the last two, like in the next two days, weekdays should be two and weekends should be three, which is the exact same thing as here. So it's not going to do anything. Most of the times what we generally recommend and actually let's see what we are recommending. This will be fun. So what we actually seem to be recommending and this is what I kind of knew about Orlando as well. Orlando is a long stay market. People come here with their kids to go to Disney or Universal Studios and Whatnot and they stay for a long time. So like what, what we seem to be saying is increase, bump up your minimum, stay too much longer and then last minute as dates get closer, that's when you want to start lowering it. So that's something to consider. Like just looking at his existing bookings. Let's, let's also see the portfolio analytics. Just want to see like because on the, on the calendar I'm able to see that. So I don't know if he has blocked the calendar here or if it is booked. I want to see from portfolio analytics what's happening.

Yeah, I'm gonna go look. So the 27th and 28th April. Yeah, what I can do back on here, there is a booking that has come in.

Okay.

Two nights, 27th and 28th of April. Yeah. So that's a two night booking arriving on the Thursday, checking out on the Saturday, which is what we're seeing here. Yeah, obviously. And that was booked, That was booked on the 8th of March. So the 8th of March was last week. We're obviously recording from the 13th. Yeah. So that was a perfect bar out booking and it booked for two nights.

Yeah. So I want to show like a few different things here. One is the easiest. This is sort of almost to me, no brainer to avoid. And this is one of those things where I don't know why OTAs do it the way they do it. Because if you have a minimum stay of three nights here, you would think on Friday that if a booking has to go over Friday, it has to be three nights long. But that's not how OTAs work. Now they used to when like many years back that way, but now all they do is they check when the guest is checking in, what's the minimum stay and it's tonight. Sure. Two nights are allowed. Right. So although he has set his weekends to be three, these kinds of bookings are possible. So like the first thing I would ask him to do is include Thursday in that three night weekend booking. And let me see where that setting is right here. So instead of having the weekend setting applied to only Fridays and Saturdays, I would say apply it on the Thursday as well. And that would, that would make sure that the minimum right here is three. And that way if anybody's starting a booking on Thursday, they have to book at least till Sunday check out on Sunday so that you're not splitting your weekend anymore. Right?

Massively. Yeah. For somewhere like as well. That's key. It was really interesting that Price Labs is saying a minimum stay of six nights.

Of six nights, yeah. So I want to dig into that one first. I want to see what did, what was, what has Cuny been getting? Right. So like he has been getting his length of stay that he's been getting has, has mostly been three to four nights and equal number of nights are booked with a two night stay and five to six night stay and we are looking at total book nights. That's important because if you look at total number of bookings two nights will tower up because even though, so there are probably nine bookings here and there are probably three bookings here. Right. So like if you look at by number of bookings it will look like yeah I'm getting a ton of two night bookings but that's not necessarily the right way. You should look at by number of nights. But even here like the, the recommendation we had was a lot more aggressive than, than what he has been getting right now. There could be two reasons for this. One is our recommendations are generally based on what do we see in the market. So next I'm going to pull up the market as well and then two CUNY's numbers are going to be impacted by what his settings are. So if he's allowing two and three night settings then he will get those two and three night bookings and as he gets those there is now lesser chance of getting this five and six night workings. Right. So if, but regardless like we are recommending six I would, I would say let's not jump to it, let's say when it is more than 60 days out, let's keep it five then make it four and then make it three nights within 30 or 40 days. Don't completely depart from what you had but make incremental changes and see if they help. That's generally our advice in anything.

Sorry to interrupt. Can we see as well from this data what his average lead time is as in from the point of the book into the point of arrival.

Correct. So There are some KPIs on up up top here and I'm like let's see for from Jan all the way till March and or let's say April end for all the bookings in that period he has 23 bookings. The average length of stay is 3.3 and, and average lead time is 22. Yeah, 22 days. Right. So that's aggregate numbers. Those are helpful but don't always paint the entire picture. There is this neat section called length of stay in booking window which actually breaks it out. It says what's the Booking window, how many days do you get booked, how far out? And it's saying 20 of your stays, 20 of the nights got booked. More than two to four. Between two to four months out, 16. It's like, it gives you a distribution. It generally tends to say very little stuff happens last minute and very little stuff seems to be happening very far out here in the. Right, in the middle window of like two weeks to four months. Four months, right. And then same story here with length of stay and things like that.

So with that being said, then if we're going to go through the rules that Price Labs have suggested, we would say anything more than 30 days, you would recommend a minimum of. A minimum of six nights, say, and then as soon as it gets to that four weeks, you're going to then say four nights.

I think it had three nights or something like that.

Yeah. And so eventually when we get into, when we get into that stay restrictions. Yeah. So basically anything more than far out. So anything more than 90 nights, seven nights, anything last minute, and we're including last minute within 29 nights, it then drops down to, drops down to three. And we're sort of saying that the Thursday. I think we should. I think I would definitely recommend to him to go for this, like suggest this and then make sure his Thursday is classed as a weekend.

Yeah, I, I would want to say start a little like we look at the market data that's suggesting this, but like other things, it's, it's not always like, okay to just go make an extreme change because of this. I would say go with four nights and, and three nights on the weekdays, like make that incremental change rather than sort of a big change and then see what that helps with. Right. Yeah, yeah, that would generally be my recommendation here. Now, looking at market data, I did see if he had created a market dashboard already or not. He has one trade left. I will let him create this one. I pulled out another market for the same area and I was looking at sort of the similar data for the entire region and I've. Did I filter out? No, I think he's. Let's, let's stick to four to seven bedroom homes to stay comparable to what he has.

Yeah.

Want to get a sense of like those two things, like the lead time and the length of stay, like, are they wildly different? Are they a little different? Like what are they cool in terms of booking window, I think he's getting bookings right. Where these numbers are pretty much zero for him. The market does have a little bit there but, but the meat of it is in the same window that he's getting. So, so, so that's, that's fine. This I did know like the Orlando market gets a ton of these seven to 14, like people book a week or 10 days and then just go.

Well it makes sense because you know, and again the majority, we get every single guest to fill in a Google form. And one of the things we've implemented into the business is in the Google form it asks, you know, a couple of questions, the name obviously the email. But we have how many people in your party? What was the deciding factor in why you picked us as your place to stay? And are you celebrating a special occasion? And everybody is saying Magic Kingdom, everybody's saying Disney spring break, kids birthday, birthday. And when you come to do Disney, as you know, if anybody's been to the Orlando one, it's not small, you need at least three days to even scratch the surface. So for that and then if you throw into like Universal and all the other things, you know, you're talking five days before you've even, you know, you know, got a chance to do anything else. So that window there, that five to 14 days, that makes a ton of sense to me. Yeah.

So that, that might be why our recommendation was like hey, do six. There's plenty of six night demand that you'll fill up your calendar with that. Yeah, again not something that like this is true with anything like even price wise. We generally say if you have been running something and running it well, you don't want to like jump to a completely new setting. You want to slowly get there. So like try see if it helps or not. So which is why I'm saying like don't jump to six, go to four. Like make it a four night minimum outside of 30 nights, three night within and see what starts happening. Right.

Yeah. I think the main thing for him, I think you hit the nail on the head. Make Thursday your weekend, the start of your weekend.

That's. Yeah, that's a no brainer.

I think go anything more than 30 days out, make it minimum stay at four nights because again there's only one property. Right. And I say this, when you've got one property and say that your minimum stay is seven nights, you've only got 50 bookings in a year to take, but take two weeks for maintenance and clean and whatnot. So you've only got to find 50 bookings and if you are then putting everything down to free night, then you've got to find 100 bookings. Because you're making your life a lot harder then. And when you get orphan dates, like the dates that we've seen, like those ones and twosies, they're so hard to fill. Where you could be cheeky and you could be cute and you could be clever and you could start to message people and say, hey, you've got the two nights, but would you like to upgrade it to four? Etc, but at the point of booking, if you can capture those people that are looking and if, if you use the data correctly, I mean, obviously Kenny's is brand new to this. He's probably gone and put three nights day, because he thought minimum three nights. Say, that's what everybody's doing. But when you look behind the scenes of price labs and you set up the basics and then you go the next step down, which is, it's amazing that we can do this now, is that you can go, oh, this is actually what the data is telling us. This is why it's telling us. And this is what everybody else is doing. So you get that extra level of confidence that you can do that next step instead of just sort of plucking a number out of the sky and hoping for the best.

Yeah. What else shows up?

What was with the youth amenities? One that I saw on that chat that you were quickly. The report that you had there was something with amenities. If you could just quickly walk us through that one, because I think that's going to be important.

Got it. So amenities chart is essentially we show two things. One is what's common. So you'll see that a lot of numbers here are very close to 100. Like almost every home in this region has WI fi like that. That's no surprise. Right? Every home has tv, every home has kitchen, every home has po. What you'll also see is there are two numbers here. One is about supply and one is about demand. So the supply number is it's saying 99.58% of the listings have a kitchen, which, I mean, if it's a short term rental property. Yes. And we are talking here, like four to seven bedroom properties. There are a solid point 4% properties that haven't listed kitchen as an amenity on Airbnb here. The second one is saying, what is the demand? So it's saying 99.9% of bookings are happening on a property that has a kitchen. So those.4% of listings that haven't listed kitchen as an amenity are hardly getting any booking, which is not a surprise. Like, I mean, if somebody shows up to book. The assumption would be that there's a kitchen, but if you're not listed it, they'll still want to question it. The useful sometimes thing to look at is desired amenities. And sometimes very mundane stuff shows up here just because of how, how things work. And I'll go to that. But this is a useful one that shows up here. A pack and play or a travel crib. It's saying it has a desirability score of 7.2%, which basically means maybe half the properties have it, but the number of like 50% of the properties have it. But something like 57.2% of the bookings are done on a property with a travel trip because people are looking for it.

Yeah, yeah.

Now I said so this one actually seems like it. Now that I see it, it makes sense. Like people are coming here for Disney. They. Yeah. Probably have a younger sibling.

Yeah.

Sometimes mundane stuff shows up like shampoo and cable tv, which is essentially the good properties tend to list a lot of, like a lot of things. Amenities on their property. And so like that's out. People tend to book shampoo as well. But high chair, barbecue grill, hot tub, like, generally speaking, it gives you a sense of like, okay, what could be something that I add to my property? This doesn't mean that you go add shampoo and start expecting a 6% bump in your bookings. But this is more to like spark some.

It's about, it's about like confirming the assumptions and it just makes. And again, if you've got more beds and you've got a large place and you're near Disney, which is very catered towards smaller children, there's a very high chance that in that party there is going to be somebody under the age of two where a travel crib, high chair makes a ton of sense.

Yeah. Brilliant.

Just confirms assumptions. This is fantastic. We can definitely take this to, to CUNY and we can implement it and we'll be able to sort of see in, you know, six months time what the difference has been because like I say, if we can help earn 20, $30 extra on a booking over year, that makes a big, big, big improvement on the P. L. The profit and loss.

Absolutely. Yeah. Lovely.

Appreciate that. So we're gonna look at the base, we're gonna look at the minimum, we're gonna look at the ninth days. I'll feed this all back to cuny. We'll look to implement some. Some things and we'll report back after the summer.

All right, that's super cool. Thanks. Thanks, Mark.

Appreciate your time. Thank you very much. Having a blast.

Gonna get it on the Bruce Lee podcast.

Bruce Lee, like Bruce Lee. Cause it's so hard and the T.

Is loosely making up those rhymes.

Don't write it, just do it loosely.