Dynamic Pricing in Short -Term Rentals

What Is Dynamic Pricing in Short-Term Rentals and Why Is It Important?

We’ve all noticed how airline ticket prices can vary drastically from one day—or even one hour—to the next. If you’ve ever used ride-hailing apps abroad, you’ve probably seen much higher prices during peak commuting hours. Even in local markets, like Istanbul’s Grand Bazaar, skilled salespeople may quote different prices depending on a customer’s origin, attire, or level of interest. In all of these examples, the cost of the product or service doesn’t change—but the profit margin does, depending on the selling price. That’s dynamic pricing in action.

What is Dynamic Pricing?

While dynamic pricing in the Grand Bazaar is centuries old, the modern, data-driven version was pioneered by American Airlines in the 1980s. Before then, airfares were regulated by the government. When deregulation allowed airlines to set their own prices, companies started investing heavily in forecasting models and software to optimize rates—charging more during peak times and filling seats in low season. Homesberg applies the same principle to short-term rentals: with a vast data set, we track occupancy and revenue for all listings in our coverage areas and update our users’ prices daily with our advanced algorithms.                  

                                                                The images in this article are taken from the Homesberg Turkey Dashboard.)

Dynamic Pricing for Short-Term Rentals

In the short-term rental sector, dynamic pricing is a technique that constantly optimizes prices based on parameters like supply and demand, seasonality, day of the week, lead time (the gap between the booking and check-in day), similarity between homes, special dates, and local events—all with the goal of increasing revenue.

Why Is Dynamic Pricing Important?

Let’s say you have a property that rents for 2,500 TL per night and is booked for 20 nights a month, generating a monthly revenue of 50,000 TL. If you rented it long-term, you’d get 20,000 TL per month—your “opportunity cost.” Add 2,500 TL for bills and fees, plus 7,500 TL for cleaning, supplies, and maintenance, making total pre-tax costs 30,000 TL. That leaves you with a profit margin of 40%.

Could you get more? If you raised your price to 2,750 TL but kept the same occupancy, or lowered it to 2,200 TL to fill 25 nights (bringing in 55,000 TL a month), your profit could jump by up to 25%—all by changing your pricing strategy, with almost no increase in costs.

Fixed costs (like your rent or mortgage) are the same whether you book 10 or 30 nights, while variable costs (cleaning, utilities, wear and tear) are much lower in proportion. That’s why maximizing occupancy—even at a slightly lower nightly rate—often brings more profit in the long run, provided you constantly find the optimal price.

What Should Your Average Nightly Price Be?

Many hosts focus solely on their nightly rate, but the most important metrics are your annual revenue and occupancy rate. For example: if you price at 2,500 TL and rent 100 nights a year, you make 250,000 TL. But if you price at 1,500 TL and fill 250 nights, your revenue jumps to 375,000 TL! The right question is not “What’s my price?” but “How much can I earn per year?”

Dynamic pricing is the automatic support system that helps you achieve maximum annual revenue—by continuously adjusting your prices to find the best balance between rate and occupancy, based on your parameters and market trends.

What Do You Need to Implement Dynamic Pricing?

To price dynamically, you need to know your market and competition inside out. You must track changes, prices, and calendars daily—all year round. This requires analyzing a huge data set every day, which is a major investment of time and energy for individual hosts.

Homesberg handles this for you, analyzing and updating your prices daily for your property. Check our live, regularly updated World Data page for detailed data. If you want to increase your revenue by up to 27% with minimal effort, register now and claim your $75 launch credit!

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