This document provides guidance on pricing a homestay business. It discusses fixed and variable pricing components to consider like base rates, taxes, and target profits. Customer segments like families and business travelers affect these components. The document recommends pricing strategies like bundle pricing, dynamic pricing based on market conditions, and undercutting competitors. It advises focusing on competitive advantages, building customer relationships, and offering guarantees. The pricing process involves researching competitors, understanding your own value, market segmentation, choosing a strategy, and reviewing responses and competitors to adjust pricing over time.
3. Pricing Components - Fixed Costs
• Base Rate - The expected returns of the house rental
• Service Fee (per booking) - Additional costs incurred per
booking
• Tax - Tax that applies to your homestay business
4. Pricing Components - Variable Costs
• Service Fee (per night) - Additional costs incurred per
night
• Target Profit - Net profit you or your shareholders
anticipate
5. How Different Customer Segments change
the Weightage of Pricing Components?
Customer
Segments
Service Fee
(per booking)
Service Fee
(per night)
Target
Profit
Family Medium
Answer more inquiries
and time needed is
longer
High
Cost and time
needed is longer
High
Business Above Medium
Required pre-booking
documents, cost is
higher
Low
Longer stays’
possibilities is higher
Medium
6. Why Finding the Best Pricing Strategy Matters?
• Survival
• Profit
• Status Quo
8. Pricing Strategies
1. Bundle Pricing - Gives special offers to customers at lower
price with special conditions
* Get more attention and possibilities is always good
1. Dynamic Pricing - Prices will be updated regularly according
to the market conditions
* Reduce the idle rate
3. Valuable Prices - Level of satisfaction is higher than the
money they need to pay
* Opportunities for customers to visit again is higher
9. 4. Price Matching - Pricing no difference with competitors
* Attract customers from competitors
5. Undercut Strategy - Provide a specific package that is similar
with competitors BUT with lower price
* Catch customers’ attraction with the specific package and
gain new customers
6. Price Penetration - Provide the lowest price in the whole
market
* Gain attraction and establish more market share
11. Competition
Make yourself unique
• Focus on Competitive Advantages - Focus on what you can
bring to customers
• Establish relationships with your customers - Higher
loyalty bring sales to you
• Offer a Guarantee - Possibilities to be choose is higher
13. Price Searching Steps
1. Looking at local competition
List out the competitors and understand more. The easiest way is
to do research on Google Map.
1. Understand your own value
Look to those which are similar with your homestays. Estimate the
value of your own homestay.
3. Find out your strategic position
Help you to attract more customers.
14. 4. Market Segmentation and Selection
Segment the market according any criteria. Choose one or more
that you can capable.
5. Decide the strategy
Always remember to modify the pricing strategy according to the
situation
16. What should you do after setting a pricing
strategy?
• Review the reponses
* Review responses from the customers and sales volume
• Observed the situation
• Delivery more values consistently
* Provide service specialization to your customers
• Observed your competitors
* Identifying the strategy that your competitors are using.