This article explains what the Base Price is, how it affects the price recommendations and how to set the base price.
What is the Base Price?
The Base Price is really important as it is the starting point for our price calculation. Think of it as an average price for your reference room/rate for the whole year. In the high season, your price will be higher than the base price, in the low season, it will be lower. We adjust your price throughout the year to take into account the different demands. But the base price is set to be the average of all of these.
We also set a minimum and maximum boundary to the algorithm so that when you will be in your low season the prices will drop more towards your minimum and opposite when you are in your high season, the price recommendations will be higher. But again that is dictated by the demand in the area and of course your occupancy.
How is the Base Price set initially?
When we set the base price initially we look at what you have been doing already. We take your current average over the year and then add 3% because we want to aim for a higher ADR. When we set your RoomPriceGenie account, we are able to pull data from your PMS/Channel Manager and based on the prices we see, we determine the base price.
Why would I change it?
In general, we do not recommend you change your base price often. There are more targeted ways to affect pricing.
However, if you feel that your prices all year round are too high, then you can drop the base price as dropping the base price will drop all the prices all year round.
Alternatively, many hotels would do better if they charged a little more on average. To increase your prices all year round, make the base price higher.
For example, if you want your prices to be 3% higher and your current base price is $100, then you can increase your base price to $100*(1.03) = $103.
Why would I not change it?
Often clients like to change their prices for a certain period of time rather than for the whole year. In this case, we don’t recommend you change the base price! Instead, we offer specific features such as general adjustments for a specific day of the week / for a whole month (for more info click here) or changing the price recommendation for a specific time in the Price Pop-up or in the Adjustment Calendar (for more info click here).
Where do I change it?
After changing your Base Price you can go back to the Price Calendar. Your recent changes will be shown after the prices are automatically re-calculated based on the newest framework. Thereafter we recommend that you take a look at the Price Chart and evaluate the new price level.