January 4, 2023 | Hailey Friedman
Hosting vacation rental properties can be profitable. Vacation rental websites – like Vacation Rentals by Owner (Vrbo) – make it easy to get bookings. Vrbo is a great vacation site for vacationing families and larger groups. Its listings are full-space rentals, so there are no room rentals.
But, how does Vrbo pricing work? Vrbo has different pricing and fee structures that are important to consider before listing your property.
This article will review all the Vrbo fees for vacation rental owners, travelers, and more. Let’s review.
Vrbo offers two pricing models; pay-per-booking fees or an annual subscription. Generally, the size of your business determines which pricing model is the most cost-efficient.
The pay-per-booking model charges a commission and payment-processing fee per booking. The number of annual bookings and your rate determines how much you will pay the company.
The fees do not apply to Cancellation Protection or Property Damage Protection. But they do apply to all charges your guests must pay you, including:
Refundable security deposits
Taxes and VATS
A benefit of the pay-per-booking model is not having an upfront cost. You only pay Vrbo a percentage of what you earn.
The annual subscription fee covers unlimited bookings for the whole year. You must pay this fee upfront, no matter how much you earn in the upcoming year.
A couple of the benefits of the annual subscription fee include:
Not calculating percentages for each listing, although Vrbo does this for you automatically.
Can be more cost-effective if you have high-value properties.
Vrbo offers a 14-day window for canceling annual subscriptions should you switch to the pay-per-booking model.
The annual subscription fee is $499. The yearly subscription could be a cost-efficient payment model if you have a high-value property and plan to earn more than $6,250 annually.
If you plan to make less than $6,250 or more annually, you could save money with the pay-per-booking model. The pay-per-booking model has a commission and payment processing fee.
The commission fee is five percent of the rental amount and any additional charges. This percentage may be higher if bookings originate from Vrbo’s expanded distribution partners.
The payment-processing fee, or credit card processing fee, is three percent of the amount you receive in payments. But Vrbo reimburses the processing fee for damage deposits when you refund guests.
If you use property management software integration, there is an additional fee and Vrbo also charges a five percent booking fee for reservations made through other Vrbo-owned websites.
In December 2020, the company provided another option. Vrbo may enforce a 15% commission per booking if:
You connect with Vrbo through a channel manager.
You have a commercial contract.
You are a property manager with multiple properties.
You don’t reside in the United States.
However, the guests no longer have a service fee, which makes these rentals more desirable.
Guests’ service fees vary from six to 15 percent of the reservations’ subtotal. Guests may also be subject to cancellation charges depending on your policies.
Vrbo has the following options:
No Refund: Reservations are non-refundable under any circumstances.
Strict: Reservations are fully refundable up to 60 days before the start of the stay.
Firm: Reservations are fully refundable up to 60 days before the start of the stay. Guests can receive a 50 percent refund for cancellations made up to 30 days before the beginning of the stay.
Moderate: Reservations are fully refundable up to 30 days before the start of the stay. Guests can receive a 50 percent refund for cancellations made up to 14 days before the beginning of the stay.
Relaxed: Reservations are fully refundable up to 14 days before the start of the stay. Guests can receive a 50 percent refund for cancellations made up to seven days before the beginning of the stay.
Airbnb lets you activate “Smart Pricing” to adjust your rate by demand automatically. And fortunately, the vacation rental site lets you connect dynamic pricing software to your listing to take advantage of pricing tools like Wheelhouse.
Most Vrbo pricing tools start with your base price. The base price considers the historical value of your vacation property. Your competition’s listings can give you an idea of a pricing point for your rental.
When setting a base price, consider:
Looking at past performance data
Evaluating local sights and tourism
Your ownership costs, such as your mortgage and property taxes
Amenities, renovations, and guests’ reviews all impact your base price. You may need to adjust your price after upgrading a bathroom or receiving a poor review. These factors affect your listing, but not the whole market.
Basing your listing on comps is a good strategy, but that only works if the pricing is correct. They – and you – could be leaving money on the table if you don’t utilize a proper dynamic pricing strategy.
Dynamic pricing is the practice of varying the rate to reflect changing market conditions. It’s the reason things are more expensive during certain days of the week or times of the year.
For the most profitable Vrbo pricing, you want to set a higher price at times with more demand. Likewise, you want to set rates lower during slower periods. Empty properties still cost money if they are unoccupied.
Instead of tracking and analyzing all of this on your own…
The website’s fees.
Real-time demand trends.
Your out-of-pocket costs, like cleaning fees.
Discounted and bundled pricing.
…a revenue management tool that uses dynamic pricing can do this for you.
Seasonality is one factor, causing higher booking for:
Beach houses in the warm months.
Ski chalets in the winter.
New Orleans homes during Mardi Gras.
Your rental calendar could also have different rates based on the days of the week. For instance, downtown rentals are higher on weekends, whereas the financial district could be more popular for traveling business people during the workweek. Family members and sports fans may want to visit college towns on Thursdays or during a game.
Similarly, local events can cause a higher demand for accommodations. Again, using college towns as an example, parents could flood these areas for graduation. Keep a calendar of local events.
Your Vrbo pricing should also consider discounts for times with low demand. Review your booking calendar and lower your daily rate to improve the chances of a booking. A lower price can increase your listing’s visibility since many travelers sort options by the lowest price.
Dynamic pricing Vrbo software automatically sets your listings’ rates based on thousands of factors. Here are some of the benefits of using this pricing software:
More bookings. Dynamic pricing helps you seize all potential travelers. Segmented pricing and reduced time-based pricing mean higher occupancy rates.
Higher visibility. Your listing can stand out from your competition by setting rates slightly lower.
Increased revenue. Wheelhouse’s research discovered that dynamic pricing averages a 22.6% revenue increase per listing.
More time and less money. Vrbo pricing guide software does the research and analysis on your behalf, saving you time and resources trying to set the best price.
Adaptability. The market changes and trends influence how much your guests may be willing to pay. Price flexibility helps boost your sales.
Dynamic pricing software can make your job easier if you are responsible for managing multiple properties. Or, suggest it to your vacation rental management company if you are concerned about getting the highest revenue property.
A dynamic pricing Vrbo tool can increase your occupancy levels and maximize your revenue without you spending hours comparing data. Here are some of the best:
Wheelhouse is a pricing tool for every type of real estate investor—hobby hosts, advanced owners, and professional property owners. The software includes an adaptable pricing tool, market insights, competition data monitoring, and ultimate customization capabilities.
Simply enter details about your portfolio and watch the magic happen with easily adjustable pricing. Customers rave about the platform’s intuitive interface and endless customization capabilities, including far-future predictions and risk tolerance.
Base, minimum, and maximum price
Configurable risk tolerance
Performance tracking. dashboards, and targets
Pro Plan #1: 1% of revenue with a minimum monthly fee of $2.99/month
Discounts for 100+ listings
Pro Plan #2: $19.99/month, with the following discounts:
15% ($16.99)for 10-49 listings
30% ($13.99) for 50-100 listings
Contact for discounts on 100+ listings
Contact for pricing, custom offerings for 100+ listings
Beyond Pricing is a revenue management solution that’s a one-stop-shop for short-term rental managers. Founded in 2013, the company provides services for over 340,000 listings in 7,500 cities worldwide. This pricing software focuses on three major demand factors to inform its pricing automations:
Day of the Week
The tool provides market insights and intuitive dashboards, allowing you to view your portfolio at a glance. Overall, customer reviews are good, with users improving profitability and heightening occupancy.
Market-based health scores
Individual listing reviews
Travel agency syncing
Portfolio performance insights
1:1 expert consultations
30-day free trial
1% of bookings each month, with credits refunded for each cancellation
Two payment methods:
Pay on Book (1% charged upon the reservation)
Pay on Stay (1.49% charged when the guest checks in)
PriceLabs is a dynamic pricing software monitoring current and historical booking information to recommend pricing. It also offers a market dashboard to help you measure your portfolio performance against the competition, assessing a wide variety of factors like:
Bookings and cancellations
Unfortunately, customers report challenges using the platform because it’s not user-friendly. Additionally, the tool is pricier than others on the market.
Holiday pricing adjustments
Orphan day prices
$19.99/month for one listing
Portfolio analytics are free.
If you choose to list with Vrbo, it’s important to maximize your listings’ potential. How does an average increase in revenue of 40% sound?
Good, right? Then try Wheelhouse. Our intelligent pricing software studies over 10 billion data points to recommend the perfect pricing for every rental, You retain complete control over your pricing and pricing strategy and adjustments can reflect your risk tolerance and business goals.
Because it’s dynamic, the recommended pricing changes with the market to ensure maximum occupancy. Price your listings aggressively to maximize your potential revenue or set conservative pricing to optimize your booking possibilities.
Best of all, you can choose to manage your prices manually, or set-and-forget for a more hands-off approach. As your portfolio grows, the software scales to help you manage all of your rentals.
Ready to see dynamic pricing in action? Try Wheelhouse today!
January 17, 2023 | BY Hailey Friedman
January 14, 2023 | BY Hailey Friedman
January 6, 2023 | BY Hailey Friedman
January 4, 2023 | BY Hailey Friedman