Pyramid of Pricing

[00:00:02] Speaker A: This is short term rental management, the show that is all about short term rental property management with your host, yours truly, Luke Carl the pyramid of pricing. [00:00:17] Speaker B: Today on short term rental management, long. [00:00:19] Speaker A: Haired Luke Cashflow Carl, the man of the hour. [00:00:23] Speaker B: That tower of power too sweet to be sour. [00:00:25] Speaker A: On behalf of the short term shop, today we are going to talk about how to properly price your house after you've got everything done correctly. It is not a race to the bottom. You do not need to go for the low hanging fruit of lowering your rates, lowering your rates, lowering your rates. And today we will uncover that myth and prove that there are other ways to increase your gross rents and your average nightly rate. With the power of ancient Egypt and the pricing pyramid on behalf of the. [00:01:05] Speaker B: Short term shop. [00:01:08] Speaker C: This episode of the short term show is brought to you by the short term shop. 30 year fixed mortgages, tax benefits, and long distant management training made easy are just a few of the perks of owning a short term rental. The short term shop can help you buy and learn how to manage your property from anywhere in the world. Just go to theshorettershop.com and click get connected again. That's theshorettershop.com and we are brokered by exp. See y'all over there. [00:01:36] Speaker D: Yes. [00:01:37] Speaker A: Without further ado, the pyramid of pricing brought to you by yours truly, Cashflow Carl, the director of education for the shop. [00:01:47] Speaker D: And there is a lot of crap. [00:01:52] Speaker A: Out there saying just race to the bottom. Lower your rates, lower your rates, lower your rates. And that is true in some cases. Sometimes your rates are too freaking high. But there are a lot of other. [00:02:02] Speaker B: Things you can tweak before it gets to that point. [00:02:05] Speaker A: A lot of things we're going to talk about today are on the five pillars of a fantastic listing, which you. [00:02:11] Speaker B: Can find, of course, on our YouTube channel, the short term shop on YouTube. [00:02:16] Speaker A: But without further ado, let's just jump in. [00:02:19] Speaker D: Headline, headline. [00:02:21] Speaker A: Now, the biggest part about your headline. [00:02:23] Speaker B: Is that it cannot remain the same. It needs to change all the time. [00:02:27] Speaker A: It cannot get stale, remain stagnant, boring. [00:02:32] Speaker D: The best way to get higher rates. [00:02:34] Speaker B: Is to make yourself popular. [00:02:35] Speaker A: The best way to make yourself popular. [00:02:37] Speaker B: And the algorithms to like you, is to change things as often as possible. [00:02:43] Speaker A: Tweak your headline. [00:02:45] Speaker B: Jiggle it. [00:02:46] Speaker A: Do the old Brooklyn jiggle. And maybe you just swap one word, reverse two words, so that one's in front of the other and then the. [00:02:53] Speaker B: Other one is in front of the other one. [00:02:54] Speaker A: And you do that every now and. [00:02:56] Speaker D: Then and you will get a few. [00:02:59] Speaker A: More bookings now we're talking minuscule here. [00:03:01] Speaker B: We're not talking $10,000 in gross annual rent difference between somebody who tweaks their headline and somebody who doesn't. [00:03:09] Speaker A: But it will help. [00:03:11] Speaker B: You don't go straight for the bottom of the pyramid, which is the pricing. There are a lot of other things. [00:03:16] Speaker D: Along the way that you can fix, like the reviews. [00:03:20] Speaker B: Now this is a huge one because. [00:03:22] Speaker A: Reviews are a patience game. You've got to be in the biz for a long time. Take your time, go slow, kiss ass, give a couple of bucks here and. [00:03:30] Speaker D: There if you need to, and just. [00:03:33] Speaker A: Overall quality of service. Hospitality. Hospitality. Hospitality and hospitality are the best way. [00:03:40] Speaker B: To get great reviews. [00:03:42] Speaker D: You have got to be unreasonable. [00:03:44] Speaker B: That is a book, by the way. Unreasonable hospitality. [00:03:47] Speaker A: Read that book and you got to. [00:03:50] Speaker D: Treat it like it's a five star hotel. [00:03:55] Speaker B: That's a bad analogy, because five star. [00:03:58] Speaker D: Hotels are rated based on the number of awesome amenities and things like that. [00:04:04] Speaker B: As opposed to short terms. But you get my point. You've got to crush it. You've got to go above and beyond. Send them an instacart when they're not happy, if they're having a bad day. [00:04:14] Speaker D: It'S raining, the weather stinks, turn them around. [00:04:18] Speaker A: It's a lot of psychology here. What we're talking about, my friends, is rental management, landlording. It is not revolutionary crap. It is just being good at your job. Be good at your job reviews over time. [00:04:38] Speaker B: They're a huge cash on cash return. Cash on time return. The more reviews you have, the more popular you will become. [00:04:47] Speaker A: Vacation rentals are really not unlike social media. Somebody has a blue check mark and 300,000 followers automatically. We think that, oh, they're a real person. They're like Pinocchio. I'm a real boy. [00:05:01] Speaker B: I'm better than everybody else. [00:05:03] Speaker A: I have more credibility. Same thing with these vacation homes. The more reviews you have, the more credible you are. The more people are going to believe you and trust you because they are nervous. They're scared to death. This is their vacation on the line. They don't want to put it in. [00:05:19] Speaker B: The hands of the wrong person. [00:05:20] Speaker A: So the reviews need to be on. [00:05:22] Speaker B: Point before you can even begin to worry about your rates. Now, that goes hand in hand with not having any reviews. [00:05:28] Speaker D: Your rates are going to be lower. [00:05:31] Speaker A: You got crappy reviews, your rates are going to be lower. You got three star reviews. Your rates are going to be lower. [00:05:36] Speaker B: Than somebody like me that's got killer reviews and a long time in the business and a lot of reviews over time. [00:05:45] Speaker A: Description, very similar to headline. You don't want it to remain stagnant. [00:05:49] Speaker D: It needs to be moved, jiggled, tweaked. [00:05:52] Speaker B: Don't want to have. And again, I have a video called the five pillars of a good listing. You don't want to have a big, giant chunk of words in your description. That's number one. Number two is you don't want it to stay the same for too long. [00:06:04] Speaker A: Get in there, move it around. [00:06:05] Speaker D: Doesn't have to be every day, but if it's been a while, time to jiggle it. Amenities. [00:06:13] Speaker A: Now, amenities are a tough one. What the hell's an amenity anyway? You know what I mean? I've been around a million years. I don't even know. When I was a kid, we couldn't even afford to say the word amenity. [00:06:27] Speaker E: What is it? [00:06:28] Speaker A: I don't know what that is. [00:06:29] Speaker B: That sounds like fancy people stuff. [00:06:31] Speaker A: The dictionary definition of an amenity, a. [00:06:34] Speaker D: Desirable or useful feature or facility of a building or place. [00:06:40] Speaker B: Heating is regarded as a basic amenity. [00:06:43] Speaker D: According to Webster's dictionary or Google, whichever came first. So, for instance, coffee machine. [00:06:53] Speaker A: You got to have a great coffee machine. And you need to also set the. [00:06:57] Speaker B: Expectation for your amenities. [00:06:59] Speaker D: Boom. [00:07:00] Speaker A: If you don't have a keurig, you damn well better tell your guests there's no Keurig because they're going to show. [00:07:04] Speaker B: Up with the pods, and then they're. [00:07:06] Speaker E: Like, crap, I got to go find. [00:07:10] Speaker D: A coffee grounds and a filter. [00:07:13] Speaker E: Whoops. [00:07:14] Speaker B: So coffee station needs to be on point. [00:07:18] Speaker A: You need multiple coffee things, gadgets, if you will. But again, I'm not here to give you a coffee freaking formula, all right? [00:07:27] Speaker B: Don't overthink that. [00:07:28] Speaker A: What I am here to tell you. [00:07:29] Speaker B: Is that whatever your coffee system is. [00:07:30] Speaker A: Needs to be bulletproof. If you've had a coffee system failure, fix it. [00:07:36] Speaker B: Add something to it. Take something away that is not working. [00:07:39] Speaker A: Correctly or getting questions, comments, et cetera. [00:07:44] Speaker B: In my opinion, it is generally better. [00:07:46] Speaker A: To have more coffee stuff than less coffee stuff. [00:07:51] Speaker D: Also, how long has it been since. [00:07:53] Speaker B: You updated your coffee machine? Do you have a ten year old. [00:07:55] Speaker A: Coffee machine in there? [00:07:56] Speaker B: You need to have a nice, sexy. [00:07:58] Speaker D: Clean, new coffee machine and a keurig. [00:08:02] Speaker A: Maybe a french press or whatever folks use. [00:08:06] Speaker B: Hell, I don't know. [00:08:10] Speaker D: And other stuff that people like, floor. [00:08:14] Speaker A: Mats in the bathroom. I'm not here to give you a laundry list of crap that you need in your house. If you don't know what your house. [00:08:20] Speaker D: Needs, go visit it. [00:08:21] Speaker A: Better yet, go visit a bunch of. [00:08:23] Speaker B: Other vacation rentals and see what they're doing right. Go find the vacation rental with the. [00:08:27] Speaker A: Most reviews in whatever town you're going. [00:08:29] Speaker B: To and stay there. You're going to get lots of ideas to make your house better. [00:08:33] Speaker D: It's fantastic. [00:08:34] Speaker A: Now, I will say some folks are. [00:08:36] Speaker D: Going a little nuts with these amenities lately. [00:08:40] Speaker A: It's like, man, is this house come with a submarine and an underground swimming pool here? [00:08:45] Speaker E: What's going on? [00:08:47] Speaker B: Where's the petting zoo? [00:08:48] Speaker D: Hey Margaret, there's a giraffe out back. 399 a night to pet the giraffe at this house. [00:08:54] Speaker A: It's crazy. [00:08:55] Speaker B: I think we could pull back a little bit. [00:08:57] Speaker A: I think some folks are getting so. [00:08:59] Speaker B: Nervous in this short term rental space that they're never going to get any bookings that they go way over the top with all this space alien movie theater crap or whatever before they even go live. [00:09:08] Speaker A: They don't even know whether their house is good or bad without that stuff. [00:09:13] Speaker B: So I think we could tone it. [00:09:15] Speaker A: Down a little bit there. [00:09:15] Speaker B: And if you know who you are, you know who you are, you know who I'm talking to, right? [00:09:22] Speaker A: Sometimes people send me their listings. Luke, what do you think of my listing? [00:09:26] Speaker D: And it's like, did you send me. [00:09:28] Speaker A: This just to make me feel bad about my houses? [00:09:30] Speaker D: Because this thing is insane. [00:09:33] Speaker B: But that person knows that they're going to get the cream of the crop. [00:09:37] Speaker D: Top of the line rents. [00:09:40] Speaker A: So it's probably a pretty good feeling to have. But how much did it cost you. [00:09:43] Speaker B: To get to the damn petting know, putt putt and all this other stuff? Hot tubs obviously are very common in a lot of markets and I think. [00:09:51] Speaker A: You probably should have a hot tub. [00:09:54] Speaker E: With few exceptions like Florida. [00:09:57] Speaker D: It's so hot already, you may not need one. [00:10:00] Speaker B: Depends on your market. This episode is brought to you by. [00:10:05] Speaker A: The premier short term rental Facebook group, short term rental long term wealth. We have nearly 50,000 members and this is the biggest independently owned and operated STR Facebook group and it has been curated by yours truly, cash flow Carl. Join us on Facebook. Search the groups for short term rental, long term wealth. That's short term rental, long term wealth on Facebook. [00:10:33] Speaker D: And then decor. [00:10:35] Speaker A: Does this thing look like grandma Hazel used to live in it or have. [00:10:38] Speaker D: You updated some stuff like the couch? [00:10:42] Speaker B: Does the couch look like some old. [00:10:44] Speaker D: Dude died in it? Because it's like old dude couch, like. [00:10:49] Speaker A: A recliner lazy boy with like brown leather? [00:10:52] Speaker D: Or does it look hip and cool. [00:10:54] Speaker B: And sexy and modern? [00:10:55] Speaker A: I am not here. [00:10:56] Speaker B: I am not an interior designer, okay? I don't want to offer any advice in that realm. There are tons of vacation rental interior. [00:11:05] Speaker A: Designers that you should probably look into hiring. [00:11:08] Speaker D: If you feel like you need one, vet them. [00:11:12] Speaker A: Make sure you're getting what you pay for. You don't need to spend a ton. [00:11:15] Speaker D: Of money on such a thing. [00:11:18] Speaker B: But if you're like me. [00:11:19] Speaker A: Well, if you're like me, you're going to ask wifey. And luckily, my wife knows her way. [00:11:23] Speaker D: Around a house, so got a little. [00:11:26] Speaker B: Bit of a bonus there for me. But the house needs to be updated. If you've got, like, for instance, old, nasty window coverings, like those ones that are only on the top of the window, and they're, like, for looks and. [00:11:37] Speaker D: Like, ruffled dark green covered in dust. [00:11:40] Speaker B: Rip that crap right down, man. [00:11:43] Speaker A: If you've got a cabin in the. [00:11:45] Speaker B: Woods and everything on the walls is. [00:11:47] Speaker D: Brown and the photos are brown and the photos are of bears and moose and fish, time to step it up. [00:11:57] Speaker A: It's time to get a little more modern. Maybe some color pops and canvas artwork or something. I don't know. Again, I'm not an interior designer, but. [00:12:06] Speaker B: It does need to look hip and cool. Everybody's using those neon light things now. I don't know. To me, those are getting played out at this point, but it seems to be people are having success with them. [00:12:17] Speaker D: So let's now move on to the home itself. Do you have outdated bathrooms? [00:12:25] Speaker B: Do you have one bathroom that was. [00:12:26] Speaker A: Updated and one that wasn't? [00:12:28] Speaker D: Do you have Vermont countertops in your kitchen? [00:12:31] Speaker A: Do you have a white stove, a black fridge, and a stainless micro? [00:12:37] Speaker D: Yikes. That's junkie looking. Your appliances need to match. [00:12:40] Speaker A: They don't have to be the same brand, but they do need to be the same damn finish and probably purchased. [00:12:46] Speaker B: Around the same time, give or take. [00:12:48] Speaker D: Now, again, if you've got brand new. [00:12:50] Speaker B: Appliances, two years later, your fridge craps out or somebody does something and breaks. [00:12:54] Speaker D: It, fine, replace the fridge. [00:12:58] Speaker B: But for the most part, they do need to look like they were meaningful. [00:13:02] Speaker D: Like a purchase together and done on purpose, that kind of thing. And paint is a big one. [00:13:11] Speaker B: If you haven't painted the inside of. [00:13:13] Speaker A: Your beach home in ten years time. [00:13:15] Speaker B: To do that, it's difficult. I just got to build a paint the inside of one of mine recently, and it knocked my socks off. I was like, damn, it's expensive to paint a house. And the downside of that is the. [00:13:26] Speaker D: Second you get it painted, they're going. [00:13:30] Speaker A: In there and they're filthing it up. [00:13:31] Speaker B: With the filth and muck on their fingers, and then they're scratching it on. [00:13:37] Speaker A: The way up the stairs with their suitcase. [00:13:39] Speaker D: And then. [00:13:40] Speaker B: No more fresh paint. [00:13:41] Speaker A: First guest, no more fresh paint. [00:13:43] Speaker B: So it is a difficult thing, but you got to freshen it up, man. Make it look nice. It's got to have a wow factor in the home. [00:13:51] Speaker A: And again, if you don't have that. [00:13:53] Speaker B: Wow factor, new bathrooms, et cetera, then your price per night is going to be reflected in that. [00:13:58] Speaker A: And that's okay. [00:13:58] Speaker D: There's nothing wrong with that. But just keep in mind, Luke, I'm. [00:14:03] Speaker B: Not getting any bookings. [00:14:04] Speaker A: I'm not getting any rents. [00:14:05] Speaker D: Well, are you comparing your house, that's. [00:14:08] Speaker A: 15 years dated to the petting zoo house? [00:14:11] Speaker B: Because, no, you're not going to get those nightly rates. And if you're pricing your property at. [00:14:14] Speaker A: The rates of that enemy, then you. [00:14:17] Speaker D: Will fail and your counter is going to sit empty. [00:14:20] Speaker A: And the whole point, my friends, is asses in the seats. [00:14:24] Speaker B: Fill that damn calendar. [00:14:26] Speaker D: It is your job. [00:14:27] Speaker E: That's your job. [00:14:28] Speaker D: You're a landlord. [00:14:30] Speaker A: I know you think that you're walking on the moon with this Airbnb thing. It's like this hip, cool, new, brand new thing. No, it's not. [00:14:35] Speaker D: You're landlording. That's all it is. [00:14:38] Speaker B: The sooner we can get over that and realize that this isn't really that big a deal, the better we can become by just getting down to brass. [00:14:46] Speaker D: Tax baby pictures obviously get hammered a. [00:14:50] Speaker B: Lot in the short term rental space. [00:14:51] Speaker D: You do need to have kick ass pictures. [00:14:54] Speaker B: Beautiful, awesome, wonderful pictures. [00:14:57] Speaker A: If you're in a market where you can't find a good photographer, fly somebody in. [00:15:01] Speaker B: Either that or you got to spend $6,000 on a good camera and then go take a bunch of classes on photography. I think I'd rather fly that guy in. [00:15:08] Speaker D: So pictures are imperative. [00:15:12] Speaker B: Now, I've also seen where folks will go spend $800 on pictures, and the pictures still stink because they didn't know how to manage the cameraman. [00:15:19] Speaker A: And I don't mean micromanage. [00:15:20] Speaker B: I don't mean say, I need this picture, that picture, this picture. I mean, maybe you hired the wrong guy. [00:15:25] Speaker A: Did you hire, like, a straight up real estate photographer? [00:15:27] Speaker B: Or is it somebody that specializes in vacation homes, which is not always. You can't find that in every market. [00:15:34] Speaker D: Most vacation towns are going to have that. [00:15:37] Speaker A: Now, again, the most important thing about photos is moving them around. [00:15:43] Speaker D: You can't keep the same five photos. [00:15:48] Speaker A: And remain popular you just can't, man. It's like showing up to school in 11th grade wearing the same outfit every day. People are going to pick on you. [00:15:59] Speaker D: You're not going to get the girls. You got to up your game, come. [00:16:04] Speaker A: In looking sexy, move those pictures around, put on a new outfit. Those five first five photos of your listing are imperative. [00:16:12] Speaker B: They are very important. [00:16:14] Speaker D: Got to rotate them, freshen them up. [00:16:17] Speaker B: Maybe you put one in there that. [00:16:18] Speaker A: Hasn'T been in there ever. [00:16:20] Speaker D: Maybe you put one that really doesn't. [00:16:21] Speaker A: Even need, belong there for a few. [00:16:23] Speaker D: Days and then swap it back out. First. Five photos, vastly important. Huge. So important. All the photos are important. [00:16:33] Speaker B: If you got a crappy photo that doesn't make sense or it's a little. [00:16:36] Speaker D: Bit blurry, get rid of it. [00:16:39] Speaker B: I mean, if you're sitting there saying, I need to have 40 photos because somebody on the Internet told me I needed to have 40 photos, and you've got like a crappy photo in the mix there just to have 40. [00:16:48] Speaker A: What are you doing? Delete that thing. Get down to 39. It ain't that big a deal. I'm not here to tell you how many photos. [00:16:54] Speaker B: I haven't even seen your listing, by the way. [00:16:57] Speaker A: You can show us your [email protected]. [00:17:01] Speaker B: Stristingadvice.com it is a Facebook group. We'd be happy to give you some advice on what we think will make your listing better so that you can. [00:17:10] Speaker D: Raise your rates, which is what we will get to. [00:17:15] Speaker B: Now, let's talk about pricing. Pricing is the foundation of this pyramid. It is at the bottom. It is the very core of your financial future. [00:17:25] Speaker A: And if you want the big primo. [00:17:27] Speaker B: Pimp ass prices, you've got to get all this stuff in order first. Get your money right, baby. [00:17:34] Speaker D: Get all this stuff tweaked. Perfect. Ready to rock. [00:17:37] Speaker B: Headline. Reviews, description, amenities, decor, home pictures, and then we go for the prices. [00:17:44] Speaker D: Again. [00:17:45] Speaker A: If you are new, don't have any. [00:17:47] Speaker B: Reviews, and you got an old couch. [00:17:49] Speaker D: That you can't afford to replace, it's. [00:17:51] Speaker B: Reflected in your prices. Simple as that. [00:17:53] Speaker D: Common sense. If you've got the giraffe outback and the submarine, it's reflected in your prices. [00:18:03] Speaker B: That submarine is expensive to run, man. You're going to have to get that. [00:18:06] Speaker D: Price per night up. [00:18:07] Speaker B: Jack it up. [00:18:10] Speaker D: Pricing is the foundation of your pyramid. [00:18:13] Speaker A: And you cannot get it in order. [00:18:18] Speaker B: Get it where you want it to be without all of this other stuff done first. [00:18:21] Speaker A: Don't go just straight to the low. [00:18:22] Speaker D: Hanging fruit of the price, get all. [00:18:26] Speaker A: The rest of the stuff in your life in order. [00:18:30] Speaker D: And the pricing will succeed. [00:18:33] Speaker A: It's just like marriage. [00:18:34] Speaker B: It's like anything in life. You want to lose weight, you want. [00:18:36] Speaker A: To have a happy marriage, you got. [00:18:37] Speaker B: To work on it. You got this, that, and the other things you can do before the happiness happens. And you're doing the right thing by coming here and hanging out with the. [00:18:46] Speaker A: Reverend of real estate, preaching about cash flow and freedom. [00:18:51] Speaker D: That's what it's all about. Hard work. It pays off in the long run. [00:18:59] Speaker A: So just to recap, keep it simple. Get your listing right, get your house right, get your rehabs right, get your. [00:19:08] Speaker D: Furniture right, make it all look great, and then the pricing will be reflected in that awesomeness. [00:19:15] Speaker A: So, the pricing pyramid, the pyramid of pricing brought to you by the short term shop. [00:19:21] Speaker D: It's an honor to spend a little bit of time with you, and I. [00:19:26] Speaker B: Appreciate your time, man. [00:19:27] Speaker D: So on behalf of the shortterm shop, cash flow Carl saying, don't overthink it.