Room Setup and Derivation
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      1. RoomPriceGenie Knowledge Base
      2. Pricing Strategy
      3. Room Setup and Derivation

      Variable Costs

      The article explains the concept of Variable Cost from a Hotelier's perspective and how can you add it in the RoomPriceGenie app.

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      What are Variable costs?

      The variable costs are the extra costs associated with having a client in the room. This does not include mortgage payments or other costs that you would have to pay regardless of your number of guests - these are called fixed costs.

      Some examples of variable costs include the costs related to OTAs commission, extra housekeeping costs, food costs, heating costs, linen etc.

       

      Why does RoomPriceGenie consider variable costs?

      Our system always aims to optimise for profit, not only for increasing revenue. And thus, when optimising your revenue, we want to make sure that these costs are taken into account and that you make enough profit on each room sold. In some cases, it makes more sense to sell fewer rooms at a higher price than to sell more rooms at a lower price, right?

       
      How to effectively set the variable cost amounts?
      We want to make sure you make a profit not just revenue. Therefore, when you set your variable costs in RoomPriceGenie we always recommend you to be conservative and set them to be around half (or even more) of your minimum price.

      NOTE: If you are already charging cleaning fees separately on top of the room price, then do not include them in your variable costs within RoomPriceGenie.

       

      QUESTION: Can I set different variable costs for different room types?

      The variable costs derive from the room types. To keep things simple you only need to set variable costs for your reference room.

      variable cost

      What will happen to the prices if I set low or high variable costs?

      • If you set low variable costs (eg 25% of your minimum price) then your price can drop towards your minimum faster. It will make you more likely to try to sell rooms for a lower price because by selling them you are largely making a profit.
      • If you set high variable costs (eg 75% of your minimum price) then in lower demand times your price will stay higher. You will not get to your minimum price as quickly. This is because the system sees no point in selling your rooms unless you are making enough profit to justify it.

      Where do I set my variable costs in RoomPriceGenie?

      Variable costs are set in the reference room under the Room Setup in the RoomPriceGenie app. The detailed process can be observed as follows:

      (we are currently in the process of updating our knowledge base to the new UI. Thank you for your understanding in case you still see an outdated display. Nonetheless, the step-by-step guide will remain the same.)