How to price your property

Setting the right price for your property can be a balancing act. If you charge too much, guests might book somewhere else. If you charge too little, you risk losing out on profit. The key is to find a sweet spot — a price that attracts bookings while covering your costs and maximising earnings.

This guide will explain the essential factors to consider when pricing your property, from researching your local market to adjusting rates based on seasons and guest demand.

The risks of pricing too high or too low

Getting your pricing right is crucial. Here’s why:

If you price too high:

• Guests will compare your property to others and choose a more affordable option.

• Fewer bookings mean lost income.

• If guests feel the price doesn’t match their experience, they may leave negative reviews.

If you price too low:

• If your rates don’t cover your expenses, you risk financial loss.

• Extremely low prices can attract guests who may not respect your property.

• Some guests might assume something is wrong with your listing.

What to consider before pricing your property

Successfully pricing your rental property requires research and planning. Here’s what to focus on:

1. Understand your expenses

Before setting your rates, make sure you're covering all your expenses. Do your calculations and determine the lowest amount you can accept per night. Going below this rate could mean you’re operating at a loss. Costs to consider include:

• Fixed Costs: Property taxes, insurance, staff salaries, TV, Wi-Fi, software subscriptions, and listing fees.

• Variable Costs: Utilities, cleaning, maintenance, repairs and replacements, and property upkeep.

2. Compare prices with similar listings

A great starting point for setting your price is to look at what similar listings in your area charge. Focus on properties with the same number of bedrooms, facilities, and location to get an idea of the average price. This helps you stay competitive and ensures your rates align with comparable listings.

For example, if most two-bedroom apartments in your area charge between R1,500 and R1,800 per night, setting your price much higher without extra perks like a hot tub or sea view could make bookings less likely. Keeping an eye on competitor pricing allows you to adjust accordingly — whether that means lowering your price to attract more guests or justifying a higher rate with standout features.

3. Understand travel demand in your area

Travel trends in your area also play a big role in pricing. Are you catering to weekend travellers, holiday travellers, or business travellers? Does your area see a surge in bookings during specific holidays or events? Understanding who is booking and when can help you set dynamic rates that match demand. If your location is a hotspot during peak seasons, you can increase rates accordingly. During slower periods, offering competitive pricing can help maintain a steady flow of bookings.

4. Highlight your property’s unique value

Beyond pricing and guest behaviour, understanding the broader rental market helps you position your listing effectively. Consider how many short-term rentals exist in your area, how your property compares in quality, and what unique features set it apart. A stylish interior, desirable amenities like a pool or braai area, or a prime location — whether beachfront, city centre or near nature — can justify a higher price. If your place caters to specific travellers, like remote workers needing a home office, highlighting these features can make your listing stand out and command better rates.

5. Factor in extra fees

The total price guests pay includes not just your nightly rate but also additional fees. Consider these when pricing your listing:

• Cleaning Fee: Factor in the cost of cleaning your property, but keep it reasonable so guests aren’t discouraged.

• Extra Guest Fee: Charge for additional guests beyond a set number.

• Pet Fee: Consider a pet fee to cover potential extra cleaning needed.

• Breakage Deposit: This refundable deposit protects you from major damages. Keep it reasonable to avoid deterring guests.

Pricing strategies to keep in mind

Set a minimum nightly rate

Figure out the lowest price you can charge without losing money. This should cover your costs while still being appealing to guests. Even during quiet seasons, avoid pricing too low, as it could hurt your earnings in the long run.

Adjust prices for weekdays and weekends

Weekend stays are usually more popular with leisure travellers, so you can charge higher rates from Friday to Sunday. Weekdays may attract business travellers, so consider adjusting your pricing based on demand. Pay attention to your booking trends to find the best balance between the two.

Adjust prices for seasonal trends and holidays

Rental demand changes throughout the year, so your pricing should, too. Raise rates during peak seasons and lower them in quieter months to stay competitive. Keep an eye on local and national holidays, popular events in your area, and school breaks, as these can increase demand and justify higher prices.

Price for families and solo travellers

Offering discounted rates for children can make your property more appealing to families, while per-guest pricing helps keep costs fair for smaller groups or solo travellers. This flexible approach can attract a wider range of guests and boost your bookings.

Pricing your property effectively requires a mix of market research, strategic planning, and flexibility. By staying informed about local trends, understanding your costs, and adjusting rates to meet demand, you can maximise your bookings and profitability. Keep refining your pricing strategy based on guest feedback and market conditions to ensure long-term success. Happy hosting!