The Psychology Behind Vacation Rental Pricing

I once analyzed data for 3 years, that too of 500+ rentals, and I discovered a shocking pattern. I noticed that there are 2 side by side identical cottages, one is always 100% booked, and the other is 50% vacant. When I found out why this is so, and why this difference? I found out that there is pricing psychology behind this. Today, in this blog, I will tell you the secrets that hotel chains use, but those secrets are not known to common rental owners.

Magic Of Anchoring:

A person sees the first number (anchor) of the price of something in his mind and revolves around it.

What you want to do is show people a little more than the market value of your property. For example, if you intend to rent your property for $200, you could list it in your listing as “Weekly Price: $240.” Then, add an offer, such as a “Limited Time Offer” or an “Early Bird Discount,” and increase it to $200.

The result will be that the customer will feel like they’ve saved $40. This feeling of “saving” will force him to rent that property, and he will do it quickly.

Charm Pricing:

The brain gives less importance to round numbers. A difference of $200 to $199 can make it seem like the price is very small, when in reality the difference is only $1.

What you should do is always price your property in “odd” numbers. For example:

• For a $200 rental, write $199.
• For a $150 rental, write $149.
• For a $1000 rental, write $999.

This will result in the customer believing your property is more affordable compared to other rental prices, significantly increasing their chances of booking.

Decoy Effect:

To understand the psychology of this, people always choose things with better “value“, even when they are shown a worthless option, which we call a (Decoy).

You have to implement this, if you have only one property, then you have to create different packages for that property. For example:

• Option A (Basic): $129 per night, single room.
• Option B (Decoy): $179 per night, room + average breakfast.
• Option C (Premium): $189 per night, room + luxury breakfast + free spa access.

This will result in more people choosing option C, as it is only $10 more expensive than option B, and its benefits are also higher in rent.

Hurry Up, Only 1 Room Left Effect:

It’s always been human nature to want things that are scarce or about to end.

You need to do this by showing the property’s scarcity in your listings and on booking sites. Let me give you some examples.

• “Special offer for this week only.”
• “July dates are booking up fast.”
• “Book today and get a 15% discount.”

The result is that the customer will think that if they don’t take advantage of this offer now, it will slip out of their hands and they’ll lose it forever. Therefore, they’ll make a quick decision and rent your property.

How To Present Something:

You’ll also need to understand people’s psychology here. Presenting the same product in different ways can change people’s thinking.

You should also frame your property pricing in a way that makes people feel good. For example:

• Instead of “$50 extra fee,” say “$50 security deposit that is fully refundable.”
• Instead of “$20 cleaning fee,” say “A small fee to clean the entire house.”

The result is that the customer will feel that you care deeply about their health and comfort, and that you are not just after money.

Sell ​​As A Bundle:

Psychology plays an important role in this, too. People value a “Package” or “Bundle” more than individual items.

The simple thing you need to do is, instead of charging separately for your property, offer it as a complete package to people.

• Romantic Getaway Package: In $250 room, champagne, flowers, and a candlelight dinner.
• Family Fun Package: In $300 room, breakfast, kids’ activity kit, and board games.

The result of this will be that the customer understands the value of the overall experience, and cannot compare the price of individual items.

Social Proof:

People tend to follow the decisions of others; this is also a psychological trait of us humans. If many people like a property and good reviews are being left for it, then any new customer who comes will also consider that property good and will choose it.

You have to make your listing like this:

• Get detailed reviews from guests (with photos).
• Place alerts like “Recently Booked” or “5 Families Booked This Week.”
• Highlight star ratings.

This will ensure that whenever new customers come and see your good reviews and good photos, and also see the excellent experience people had, they will trust you and will comfortably choose you and book your property.

Conclusion:

Remember, the value of your property isn’t limited to its walls and furniture alone. You’re doing something that transforms people’s vacation time into beautiful and memorable moments. You’re creating a wonderful experience for those families.

You just have to use these psychology principles, by using these, you are not only setting your price wisely, but through this, you are also giving your guests a chance to have a great experience, so that they will choose your property again and come back to avail the same great experience again.

FAQs:

1. Why do two similar vacation rentals have different booking rates?

Because pricing psychology, like anchoring, charm pricing, and social proof, affects how guests perceive value.

2. What is anchoring in rental pricing?

It’s when you show a higher “original” price before discounting it, so guests feel they’re getting a great deal.

3. How does charm pricing help increase bookings?

Prices ending in 9 (like $199 instead of $200) make listings feel cheaper and more appealing.

4. What is the decoy effect in pricing?

It’s when you add a less-attractive option so guests naturally choose your most profitable package.

5. Why do “Only 1 Room Left” messages work so well?

They create urgency and scarcity, people act faster when they fear missing out.

6. How can social proof improve my rental’s performance?

Good reviews, recent bookings, and visible ratings build trust and convince new guests to book.