Here is the transcript of the video:
Hello and welcome to the J’poster Complet channel. Let me introduce myself, I am Clémentine strategic pricing manager . Today, we are going to answer a question we are often asked: how do I know if I am at the right price ?
So, it’s really a question and an exercise that is multifactorial . We cannot have a simple answer. First, what we advise you to do is to study your market . Look at what's happened in your market in the past in terms of occupancy rate , average price , revenue per room to really get a feel for what's happened in the past in your market and see the behavior of your market. See if your market is more seasonal , is it very linear , are there very low periods, very high periods, event periods. All this will allow you to realize how your market works and to know how to position your price, and to know if, at any given moment, you are at the right price or not.
Then, the second exercise to do is to do concurrent studies . This time, it's not to know what happened in the past, it's to know what's happening in the future. How are your competitors positioned in the future in terms of prices? Be careful, competitors are not always right. They can also do stupid things. These are people like you who don't always know what price to position. But despite everything, you have to deal with it. It is certain that even if you have identified that it is a very strong period and that you have to set a high price, if everyone has prices in terms of price, well you will not be sold. Unfortunately, it is not you who will be able to lay down the law on the market. But there are still a lot of players and prices really fluctuate depending on the market. So first, do this market research to find out what happened in the past, and then do a concurrent study to find out what is also happening in the future to already give yourself an idea.
And then when we do that, we often come up with three scenarios. There may be others, but we will take the first three scenarios. The first is: I am at a lower price than the market, but my occupancy rate is higher than the market. So that means, in the end, that I don't sell at a high enough price compared to the market, since I have low prices but I'm above, well low compared to the market, I'm above in filling by relationship to the market. So that means that I would have a bias in being able to increase my prices, because I am in fact filling better than everyone else, that is to say I am not selling for enough. Then, what can happen in these moments is to say to yourself to go and see the periods which are strong in my market, the events, the bridges, potentially the holidays, uh, the weekdays or the days weekends which may be stronger than the others. And there, increase its prices. Perhaps during the lower periods, you were at the right price, but it is true that during your strong periods, you ultimately sold perhaps at a price that was not expensive enough, and that is why you were so reserved. It can also be interesting to see how far in advance you have been booked. If you were booked several weeks or even several months in advance, it is clearly that you were not expensive enough in relation to walking, and that people clearly saw the good deal in fact and said to themselves: Well, I'm going to go and reserve this property because it's not, well, it's not expensive compared to the others. So if you raise your prices again, you will eventually find yourself being booked at the same time as everyone else. So it might be more up to the minute, of course sometimes you have to keep a cool head, but you will be booked at the right price instead of being booked too far in advance and not expensive enough. Then, you need to look at uh, how long your lower periods also started. If ultimately your low periods were booked very far in advance, it may also be because these low periods were not expensive enough. So first of all, I think it's about looking at your market and realizing the periods where you have the possibility of increasing, and then seeing if these low periods also have an interest in being increased or not.
Another scenario which is actually the opposite is: my price, or, my price is high compared to the market, but my occupancy rate is low. And here, it is clearly the opposite direction. It's because your prices are too high compared to the market, and that hasn't allowed you to fill. This is because you have ultimately overestimated your price compared to the market price. So here too the solutions, well unfortunately it will surely be to reassess your price, unfortunately downwards. Afterwards not all the time because you probably had reservations during peak periods, so during these periods, you can maintain the price you were setting, perhaps even set it more expensive, because if it's gone it was at least the right price, or maybe a lower price. On the other hand, it is all your weaker periods that there you will have to clearly anticipate if you are too expensive all year round and not reserved enough, that is that finally if you are all year round at a certain price not enough reserved, it is rather that you are too expensive and therefore re-evaluate it by doing this market study where you will ultimately see how much your market sells for, and the competition studies how much your competitors sell for on the days or months weeks later.
And then, we have scenario number 3 which is not ideal but which still happens quite often. It is: I am at the right price, that of the market, that of the competition, but ultimately my occupancy rate is not there. So there, ultimately we are going to ask ourselves a lot more questions, because that simply means that you are at the right price, you are at the market price, maybe there is no point in cutting your price, but the occupancy rate, it is not there. So here, we are ultimately going to go further than just doing revenue management and just fluctuating our prices. We will also ask ourselves the questions: what is your ad like? Are the photos good quality? Do you have good comments? On the contrary, do you have bad grades? If you have bad ratings, we can ask ourselves the question: shouldn't you redo your ad, uh, is the description of your property qualitative? You also need to look at your situation, and finally where your property is positioned in the city. It's true that if it's a seaside town and your property is ultimately quite far from the beach, we may not be able to sell it at the same price as properties that are located by the sea. On the contrary, a well that is, if you are in a very urban city, if your property is located outside, ultimately, the city center, you will not necessarily be able to position yourself at the same price as a property in the heart of the city, close to all amenities. So that too, unfortunately, we will have to say to ourselves: well, I may ultimately have to lower my price if my situation is not ideal, if my comments are not good, unless you wish to redo your ad. Then you have to ask yourself the question: if your length of stay is good, perhaps you are at the right price compared to the market, but you offer length of stay conditions and perhaps cancellation conditions too restrictive. That you are in 5 nights minimum while you are in a city, well an urban city and finally the length of stay in these cities is rather 1, 2, 3 nights maximum. And if you are in 5 nights in fact you are not already well referenced by the algorithms and in addition you can be found since customers are not looking for this type of length of stay. Same for the cancellation conditions, if you are in a city which is rather very flexible, same again, rather urban cities, if you are, you are in strict pricing, but you will already be once again less well referenced and also less less reserved since you will be strict in your cancellation conditions. And it’s true that now we are still on rather flexible trends. Afterwards, we also see that in seaside areas and ski resorts, we can try to seek stricter conditions depending on the period. And last element is: have you thought about using all the promotion, visibility boosters that are available on the different platforms to ultimately help you move up in the search results? Perhaps your ad is simply not well referenced and that is why even if you are at the right price, you are not garnering enough occupancy rates.
So in summary, if you wanted to know if you are at the right price, first, we look at our market, we look at our competition, we draw conclusions, we ask ourselves questions, and above all we test the revenue management of any way is to test strategies and see what happens. Well, thank you anyway. Don't hesitate to leave us comments, give us your opinion, and then if you liked our videos, to support our work, you can like this video. THANKS.