Dynamic Pricing For Airbnb, VRBO, & Booking.com | The Ultimate Guide to Pricing Your Vacation Rentals

Kaitlin Pothireddy

Media Inquiry

Press Kit

Dynamic pricing is one of Futurestay’s most revenue-generating features for our clients. If you are unfamiliar with dynamic pricing, the short version is that it allows you to adjust rental rates to maximize revenue, boost occupancy, or in the best-case scenario do both. In fact, our clients report up to a 40% increase in revenue thanks to this tool. 

What is dynamic pricing?

Dynamic pricing is a pricing strategy that utilizes variable prices instead of fixed-rate ones. What does that mean? We’re glad you asked! In essence, it means that prices are automatically adjusted based on market data in order to maximize revenue potential. 

An example of this might be when the area in which your short-term rental is located is experiencing downtime, in which fewer people are renting than normal. In that instance, it may be prudent to lower your prices, to stay competitive against other rental owners in the area. 

On the other hand, let’s assume you’re right in the middle of the high season because of a local event, or another particularly exciting time to visit your area. In that instance, you may want to push your price up a little bit–because if the demand for your service is high, you may be able to charge a little extra and put more money in your pocket.

What are the different types of dynamic pricing?

There are actually quite a few different types of dynamic pricing, some more complicated than others. For example, dynamic pricing based on groups allows you to offer discounts by demographic–for example, a discount for public servants or senior citizens. 

On the other hand, the examples we showed earlier are examples of dynamic pricing over time. In this strategy, you adjust your prices based on what is appropriate for the time of year in which you are operating. This is not dissimilar from value-based pricing, in which business owners research what people are willing to pay in a given time and market, and price based on that information. Likewise, competitor-based pricing adjusts based on what those around you are charging.

This might sound like a lot, but don’t worry. We’ve got your back. With Futurestay, you won’t have to worry about eighty-five different contingency plans. Our algorithm takes a variety of factors into account in order to ensure you are getting the most mileage out of your investment.

Pros and cons of using dynamic pricing

Well, let’s start with the good stuff–with dynamic pricing, you always get to stay on top of the market. In fact, many investors who use dynamic pricing experience profit gains as they raise their prices to keep up with demand. 

Furthermore, they report having success in staying ahead of the competition in terms of booking rates and positive reviews earned. Although pros like reviews don’t always immediately impact your bottom line, they do pay dividends over time as you get more and more people into your properties. 

We’re also all about flexibility here at Futurestay, and dynamic pricing provides you with just that. Rather than spending your time poring over the latest rental rates for your various properties, you can rest easy knowing that our dynamic pricing tool is using the most accurate market data to make the right suggestions for your business.

There are some things you’ll want to look out for when it comes to dynamic pricing. For starters, different platforms will offer you different levels of care when it comes to pricing. Airbnb, for example, does offer a pricing tool, but it only works on Airbnb. Short-term rental booking sites also don’t tend to offer a lot of transparency into the way their pricing systems work–when it comes to your pricing, you’ll want to know exactly what you’re getting, and that the team behind it has only your best interests at heart. 

How do Airbnb, VRBO, & Booking.com use dynamic pricing?

Airbnb dynamic pricing, called smart pricing, is a built-in tool that analyzes Airbnb data and factors to ensure that you set your property price at the exact right point. However, this system does have its limitations. Because you set the minimums and maximums, it does require additional research on your part. This really means that it just kind of fluctuates within your preset budget, leaving a large portion of the responsibility on you to gauge an appropriate range for your area throughout the year. 

Likewise, VRBO and other booking platforms will send email reminders letting you know that it’s time to adjust your prices, but they’re really still relying on you to do the lion’s share of the work. In other words, if you want to adjust on these platforms to create more profitability, you’re going to have to do it yourself.

How to price your vacation rentals using dynamic pricing

Dynamic pricing really is critical to ensuring that your short-term rental property is consistently priced at the ideal rate. It actually began in the airline industry, when executives realized that it was possible to earn more during times people wanted to fly, and that they could pick up more customers by offering lower prices during less popular times. Ever bought airline tickets on Tuesday? You’ve been a consumer on the other end of dynamic pricing.

In the case of the short-term rental industry, dynamic pricing is price optimization that allows you to fluctuate the price of your listing based on market supply and demand, days of the week, lead time, seasonality, and other similar factors. 

As we mentioned earlier, Airbnb dynamic pricing, and other in-house pricing tools, while helpful, are really not equipped to manage all of the nuances of dynamic pricing. Because they are just shifting the prices (within your range) based on activity in the area, there really is no guarantee that all of the factors have been accounted for. Additionally, it really does require a high lift on your part. Futurestay believes that our entrepreneurs have better things to do with their time than spend hours weekly researching the ups and downs of the rental markets in each zip code in which they own property.

That’s why Futurestay offers Smart Rates. With Smart Rates, property managers get a competitive edge with clear visibility into the current prices on the market, and comparable prices to their property. Best of all, Smart Rates is completely automated and will adjust to give you a clear picture of what you should be charging renters to use your property day by day. Ready to turn your Smart Rate feature on? Learn more here.

The top vacation rental pricing tools in 2022

  • Although Wheelhouse is a new tool, it places a huge emphasis on customizations. For example, like many other types of investments, you can select a conservative, recommended, or aggressive pricing strategy that adjusts based on your preference. At a minimum, we recommend keeping an eye on Wheelhouse as they get off the ground.

  • Beyond, on the other hand, is one of the original dynamic pricing tools in the short-term rental owner market. Boasting a high number of integrations, it’s definitely worth it to check out Beyond if you’re a particularly tech-savvy owner. You will want to do your homework on which property management system supports Beyond, to ensure that you have a clean working situation.

  • Another major contender right now is PriceLabs. One major perk of working with PriceLabs is that they offer a unique fee structure. Rather than charging a percentage, they offer a flat fee that you can pay for the option to get price recommendations for your properties. This tends to make them the recommended option for corporate investors or investors who have already amassed a substantial portfolio, rather than newbie investors.

  • DPGO is super useful in that it sets the exact right price for your property, day by day, which ensures that your pricing is already set exactly where it needs to be. However, as effective as DPGO is, it only works with select booking platforms, so please consider whether or not this is the right rental pricing tool for you.

  • AirDNA is quickly becoming a sweetheart on the market, because of the vast array of features that it offers, dynamic pricing included. It’s certainly got a spot in our hearts, which is why we use it to power our smart pricing tool! AirDNA not only allows you to have dynamic pricing for your existing properties, but it offers you research tools to ensure that each time you’re looking into a new property, you’ll know exactly what you’re getting into. You will need a subscription to use AirDNA, but their dynamic pricing is completely free to Futurestay users. 

Maximize your investment with Futurestay

At Futurestay, we want our entrepreneurs to worry about their properties as little as possible while making as much money as they can. To do this, it’s important for investors to stay on the market, and there is no better way to do that than with a Futurestay subscription. Among the many helpful tools we offer, we also allow you to dynamically price your properties, to ensure you maximize your revenue. Activate smart pricing now with Futurestay! 


About Futurestay

Futurestay pioneered the first operating system designed to empower rentalpreneurs with the connectivity and automation previously out of reach for everyday people running short-term rentals. Building on its promise to help rentalpreneurs succeed at any stage, Futurestay is so much more than a platform, offering anyone with an entrepreneurial spirit and a room to rent the chance to learn, earn and grow at every stage of their rentalpreneur journey.

For more information about Futurestay: 

Blog posts

Most Recent Blog Posts

December 19, 2022

Dynamic Pricing For Airbnb, VRBO, & Booking.com | The Ultimate Guide to Pricing Your Vacation Rentals

Read News

June 13, 2022

Futurestay’s Ultimate Guide to Google Vacation Rentals: Increase Direct Bookings and Revenue in Your Short-Term Rental Business

Read News