Setting minimum prices is an excellent approach to get comfortable with dynamic pricing.
If you deem it appropriate, you can also set thresholds for maximum prices, but be aware that this choice could limit your earning opportunities.
What are minimum and maximum prices?
The minimum price and maximum price should correspond respectively to the minimum and maximum nightly price that you are willing to offer for a specific room type on a specific date, date range, or season.
"The minimum price can be thought of as the price you are willing to offer as a last-minute discount to occupy a specific room and cover its operational costs in relation to the performance of the entire property."
If set manually according to a proper strategy, minimum and maximum prices should vary and be weighted differently depending on the specific characteristics of the individual property, its costs, features, location, etc.
Important: Often, the manually set minimum price tends to be too high because it is confused with the base price. The intelligent Smartpricing algorithm already considers the property's historical sales, the market, and many other factors to propose the best prices, at the right time, with the sole purpose of maximizing revenue and occupancy. Allowing the algorithm to move as autonomously as possible is always the best strategy.
Tip: If you are just starting to learn about the world of dynamic pricing and are unsure how to approach this aspect, we offer a simple tip to apply: take your old price list and set the minimum prices at 20% less than the list's price/night. For example: if before using Smartpricing, in August, the price/night you offered for a double room was €160, consider starting by setting a minimum price of €128 in the Smartpricing dashboard for the same period and room type.