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Proud Texan

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I know some of you probably have either a business degree or have at least taken some business courses. Then again, there are some us that are operating our business by the seat of our pants and learning as we go.
I was just curious as to how YOU go about setting and adjusting your rates. There are so many variables, of course. But, in general besides just looking at the rates of your competitors in your local market, what other factors should be considered.
We seem to be about in the middle of the range for our area and guest don't even seem to balk at what we're asking. We are thinking of raising our rates to accommodate all of the unforeseen expenses that seem to keep cropping up like breakage and extra cleaning. Thoughts? Advise?
 

Joey Camb

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what I would do is edge up the price ie put up a few dollars ie 5 see how that goes for 3 months then put it up a few more till you find your biting point. I am working with this at the moment as I think I am under pricing myself one step at a time. then when you get to a point where you are happy and or people are balking then you can stop or put it down a bit no harm done.
 

Morticia

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Think seasonally if that is an issue. If you are getting no push back on the prices, you have room to increase. If you are hearing, 'What a bargain!' you have room.
However, if you are raising prices to offset the unforseen, make sure you are depositing that money in a special 'unforseen' account. You get used to extra money very quickly and forget why you did that!
 

Breakfast Diva

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what I would do is edge up the price ie put up a few dollars ie 5 see how that goes for 3 months then put it up a few more till you find your biting point. I am working with this at the moment as I think I am under pricing myself one step at a time. then when you get to a point where you are happy and or people are balking then you can stop or put it down a bit no harm done..
I agree with Cam. Start edging up your rates $5 or $10 and see what happens. I did that my first couple of years and it worked out well. Repeats didn't seem to notice the difference and it's much better than a big jump.
A consultant once told me that if you're not losing about 10% of your calls because of the price, then you're priced too low. Of course these days it's more difficult to tell because of online reservations, but if you don't see any signiicant drop in your reservations, then keep edging up until it seems you're at the right price point.
 

wendydk

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I looked at our area competitors, but that helps only a little, because they are nothing like us. I looked region-wide at Inns like myself; what they were charging, their occupancy, their reviews. This led me to believe that I was underpricing my rooms, even my shared bath room. June-October, business is always great, and no one was balking at my old rates, so I raised them all up by $10.00-$20.00 per night. Still no balking, and my private bath rooms are more expensive than some offered by both of my more glamorous and architecturally significant "competition" in town. In fact, my shared bath room is priced the same as their lowest priced PB rooms!
We'll see what Fall and Winter shake out like....I might have to go down, but maybe not. I do offer a $20 per night discount year round on stays of three nights or more.
Something I found suprising...Lots of good reviews means you can get higher rates more easily. I found the opposite to be true of those Inns with few or no reviews.
 

Proud Texan

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I looked at our area competitors, but that helps only a little, because they are nothing like us. I looked region-wide at Inns like myself; what they were charging, their occupancy, their reviews. This led me to believe that I was underpricing my rooms, even my shared bath room. June-October, business is always great, and no one was balking at my old rates, so I raised them all up by $10.00-$20.00 per night. Still no balking, and my private bath rooms are more expensive than some offered by both of my more glamorous and architecturally significant "competition" in town. In fact, my shared bath room is priced the same as their lowest priced PB rooms!
We'll see what Fall and Winter shake out like....I might have to go down, but maybe not. I do offer a $20 per night discount year round on stays of three nights or more.
Something I found suprising...Lots of good reviews means you can get higher rates more easily. I found the opposite to be true of those Inns with few or no reviews..
Thanks for the reponses.

We have already padded our pricing so that we can offer discounts when the need arises without cutting into the bottom line. We ARE unique to the area and do offer a lot of perks.
Just recently mentioned in a currently running thread, people are looking for value first and price second.
Having been in advertising for a number of years, I know that sometimes value is what is perceived and not actually present. I don't mean that we are sometimes deceptive creating a bait-and-switch scenario, but that how what you have is perceived subjectively especially when you are targeting a niche market. I think, being able to determine what your perceived value IS will go a long way in helping you to determine what your rate should be.
 

Country Girl

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Several years ago we raised our rates after fellow innkeepers (not competitors) told us we were too low. It worked out great. Last winter was the first time we did a lower seasonal rate and it didn't make any difference in room nights booked compared to previous years so we won't be doing that this year. I do think you have to check out your competition. We are lower than some and higher than others. We're at a comfortable place for us right now. Oh, one other change we made was to offer a variety of rates depending on the room. We used to have two rates and now we have three. That made a huge difference. Interestingly enough the highest and lowest rooms now get booked first. The ones looking for a "bargain" are happy and the ones looking for "luxury" are also happy. There's only a $20 difference between our lowest and highest room.
 

JBloggs

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Don't forget too low can be a turn off as well.
I would like to know the formula as well, as I see places with no common rooms, no acreage, no pool, no hot tub, no deck or outside guest areas, no parking, not in the best location, not near anything, not upscale or well kept, no overflowing flower gardens, who have rates as high as those in popular resort areas with tons of amenities and lots to see and do right there. It baffles the mind how they came at the room rate they did.
Do guests assume there is more there than there really is and pay it and are snookered into it? Is this a case of overselling the B&B? Or can innkeepers charge whatever the guest is willing to pay scenario?
 

wendydk

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Don't forget too low can be a turn off as well.
I would like to know the formula as well, as I see places with no common rooms, no acreage, no pool, no hot tub, no deck or outside guest areas, no parking, not in the best location, not near anything, not upscale or well kept, no overflowing flower gardens, who have rates as high as those in popular resort areas with tons of amenities and lots to see and do right there. It baffles the mind how they came at the room rate they did.
Do guests assume there is more there than there really is and pay it and are snookered into it? Is this a case of overselling the B&B? Or can innkeepers charge whatever the guest is willing to pay scenario?.
Joey Bloggs said:
Do guests assume there is more there than there really is and pay it and are snookered into it? Is this a case of overselling the B&B? Or can innkeepers charge whatever the guest is willing to pay scenario?
I guess if guests are booking, leaving great reviews or saying that you could charge more, that says it all. If they consistently mark you low for "value" or complain about high rates or shabby offerings in reviews, that says another thing altogether.
 

Proud Texan

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Don't forget too low can be a turn off as well.
I would like to know the formula as well, as I see places with no common rooms, no acreage, no pool, no hot tub, no deck or outside guest areas, no parking, not in the best location, not near anything, not upscale or well kept, no overflowing flower gardens, who have rates as high as those in popular resort areas with tons of amenities and lots to see and do right there. It baffles the mind how they came at the room rate they did.
Do guests assume there is more there than there really is and pay it and are snookered into it? Is this a case of overselling the B&B? Or can innkeepers charge whatever the guest is willing to pay scenario?.
Joey Bloggs said:
Do guests assume there is more there than there really is and pay it and are snookered into it? Is this a case of overselling the B&B? Or can innkeepers charge whatever the guest is willing to pay scenario?
I guess if guests are booking, leaving great reviews or saying that you could charge more, that says it all. If they consistently mark you low for "value" or complain about high rates or shabby offerings in reviews, that says another thing altogether.
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That's why it's so difficult. Ratings are subjective. Otherwise they would all be identical. The best we can do is get an average. And like some others here, we cater to a niche demographic and so our sampling is even smaller.
We recently tried a "Senior's Discount" for Sunday through Wednesday nights (our slowest days). 20% Off our daily rate. We barely would make any profit at all with that. However, there were no takers whatsoever. We discontinued it and all of a sudden we're starting to book those nights at our regular rate. As the previous entry said, you can go too low. Again, it's the perception of value.
Higher cost=better value Cheap=sleep on top of the sheets.
 

JBloggs

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When I first joined this forum, this group (the old forum I mean) the magic number seemed to be $100, if you charge below that people wonder why. I am not sure if that number still holds as that was 6 or 7 years ago.
I have done experiments with one room on numbers and found a higher number worked better. I tried the old "this is one lesser priced room for those looking to stay at a nice place, but not wanting to pay a lot" and it didn't seem to work that well (for us here).
 

wendydk

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When I first joined this forum, this group (the old forum I mean) the magic number seemed to be $100, if you charge below that people wonder why. I am not sure if that number still holds as that was 6 or 7 years ago.
I have done experiments with one room on numbers and found a higher number worked better. I tried the old "this is one lesser priced room for those looking to stay at a nice place, but not wanting to pay a lot" and it didn't seem to work that well (for us here)..
Joey Bloggs said:
I have done experiments with one room on numbers and found a higher number worked better. I tried the old "this is one lesser priced room for those looking to stay at a nice place, but not wanting to pay a lot" and it didn't seem to work that well (for us here).
Exactly...one of our innmates in town has a rate range of $85-240. Quite a spread, but that lowest priced room still does not rent, and is $25.00 less than my shared bath room! Their biggest rooms rent quickest, at $190 - 240. I know he just wanted to have the lowest starting rate in town, but jeez.
 

JBloggs

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What do you think about that? Doesn't it seem odd to have such a span? Are people suspicious of that? I would be.
I remember talking about this before and discussing that a shared bath or detached bath guest room is still just as nice as the other rooms and has all the same B&B amenities, just has those differences, so I wonder what that guy has that makes such a huge gap in the room rates?
 

Morticia

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Don't forget too low can be a turn off as well.
I would like to know the formula as well, as I see places with no common rooms, no acreage, no pool, no hot tub, no deck or outside guest areas, no parking, not in the best location, not near anything, not upscale or well kept, no overflowing flower gardens, who have rates as high as those in popular resort areas with tons of amenities and lots to see and do right there. It baffles the mind how they came at the room rate they did.
Do guests assume there is more there than there really is and pay it and are snookered into it? Is this a case of overselling the B&B? Or can innkeepers charge whatever the guest is willing to pay scenario?.
Joey Bloggs said:
Do guests assume there is more there than there really is and pay it and are snookered into it? Is this a case of overselling the B&B? Or can innkeepers charge whatever the guest is willing to pay scenario?
I guess if guests are booking, leaving great reviews or saying that you could charge more, that says it all. If they consistently mark you low for "value" or complain about high rates or shabby offerings in reviews, that says another thing altogether.
.
Little Blue said:
Joey Bloggs said:
Do guests assume there is more there than there really is and pay it and are snookered into it? Is this a case of overselling the B&B? Or can innkeepers charge whatever the guest is willing to pay scenario?
I guess if guests are booking, leaving great reviews or saying that you could charge more, that says it all. If they consistently mark you low for "value" or complain about high rates or shabby offerings in reviews, that says another thing altogether.
It's odd. We consistently get low(er) marks for value, we get arguments on the phone about the price ALL the time but the reviews are otherwise great.
I really think there isn't a universal truth about any of this stuff unless you are comparing the same hotel to the same hotel in a different location with different amenities. And THAT definitely shows in the reviews...people complain long and loud about how such and such should not be in the 'family' of hotels.
 

Morticia

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What do you think about that? Doesn't it seem odd to have such a span? Are people suspicious of that? I would be.
I remember talking about this before and discussing that a shared bath or detached bath guest room is still just as nice as the other rooms and has all the same B&B amenities, just has those differences, so I wonder what that guy has that makes such a huge gap in the room rates?.
I said that exact thing to my mother the other day. 'Here's a place where the rates are from $95-$450, what's up with that?' Maybe the $95 is off-season, teensy room, but I'll bet there's nothing at that price NOW.
 

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Over the years we have tried just about every price combination - and have finally settled on 3 different prices - based on room size and amenities and views - here is my unscientific results - given the choice a large % of guests picked the higher end room pricing. For the most part, we ignore the competition (we still are aware) but we offer many things they just can't.
 

JBloggs

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Our first 4 years open the higher priced rooms sold first. Now it is the mid priced rooms, as if they will feel guilty going for the gusto?
Yes, how you price them within your inn is another story altogether. Room size, bed size, views and amenities play a big part into that, and yet there are some we know here who give a way the moon for just a wee bit more in a much more upgraded room. The guests don't really get it until they are in the room.
Lemmee ask this question - Do y'all try to keep your room rates comparable, say, to each other, within the same inn? ie $5 or $20 difference at the most? or does that not matter, like Mortie said, $95 to $450 range and there are only 4 rooms.
 

Morticia

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Our first 4 years open the higher priced rooms sold first. Now it is the mid priced rooms, as if they will feel guilty going for the gusto?
Yes, how you price them within your inn is another story altogether. Room size, bed size, views and amenities play a big part into that, and yet there are some we know here who give a way the moon for just a wee bit more in a much more upgraded room. The guests don't really get it until they are in the room.
Lemmee ask this question - Do y'all try to keep your room rates comparable, say, to each other, within the same inn? ie $5 or $20 difference at the most? or does that not matter, like Mortie said, $95 to $450 range and there are only 4 rooms..
I think my rates are close enough that if someone really wants the 'extras' they don't feel like it's breaking the bank to get them. And if they really, really want to spend less, so be it.
But, I'd say that in a phone call I cannot convey everything there is and so, instead of 10% push back on prices, I get 90% hang ups.
 

JBloggs

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I wonder if we had two innmates show up on our door step, keeping in line with our rooms rates (ie not changing the range itself) would they find rooms have a different appeal and should be priced higher?
ie this room has a fireplace but it is 100 degrees outside, so I am not willing to pay more for that until winter. ? ie you have a higher rate on a claw foot tub when in reality guests prefer the non claw foot, so you could charge more for those rooms instead?
 

wendydk

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Both of my private bath rooms are the same rate...shared bath room is $25.00 less.
 
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