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Setting minimum prices is an excellent approach to getting acquainted with dynamic pricing.
If you consider it appropriate, you can also set thresholds for maximum prices, but be aware that this choice might restrict your earning opportunities.
What are minimum and maximum prices?
Minimum and maximum prices should correspond to the minimum and maximum price per night you are willing to offer for a specific room type on a particular date, date range, or season.
"The minimum price can be thought of as the price you are willing to offer with a last-minute discount to fill a specific room and cover its operational costs in relation to the overall performance of the property."
If set manually according to a proper strategy, minimum and maximum prices should vary and be weighted differently based on the specific characteristics of each property, its costs, features, location, etc.
Important: Often, the manually set minimum price tends to be too high as it is confused with the base price.
Intelligent algorithm of Smartpricing already takes production data of the property, the market, and thousands of other factors into account to propose optimal prices at the right moment, solely with the aim of maximizing revenue and occupancy.
Allowing the algorithm to operate as independently as possible is always the best strategy. Setting an excessively high minimum price would hinder the algorithm from adjusting and applying the most appropriate pricing choice for that specific room at that specific time.
Advice: If you are just starting to explore the world of dynamic pricing and are unsure how to approach this aspect, here's a simple tip to follow: take your previous price list and set minimum prices 20% lower than the listed price per night.
For example, if before using Smartpricing, in the month of August, you were offering a double room for 160€ per night, consider starting by setting a minimum price of 128€ for the same period and room type in the Smartpricing dashboard.
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