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While calculating and setting the price for your service, you should take into account all your costs such as direct costs (inputs you make to heat the room, prepare the dinner, wash the linen, etc), labour costs (salaries of the cleaning staff, reception person, cook, etc.), wear costs (financing of building maintenance, repair works, interior update, etc.), duties and taxes to pay, and, of course, pure profit.
The prices you set have to be in line with the standards established by others in the similar business (be comparable to the ones of your biggest competitor). A good idea would be to collect the pricelists of other accommodation entrepreneurs in your area, and to compare rates and pricelist presentation.
The price shall meet the financial possibilities of your target market (be acceptable) and correspond to the quality of service. Value for money isone of the most important reasons to choose accommodation out of town, especially for first-time visitors and off-season users. Consumers want the highest quality of service for the sum their budget permits. Some tourists (especially French, Dutch) are distinct in this respect. It does not mean, though, that they are looking for the cheapest option. They are just looking for the highest quality within the price range they can afford.
A common mistake is made in considering high quality of accommodation as a synonym of luxury. In reality, quality is a measure of how the services meet the demands and expectations of the customer. For some tourists a quiet room with a simple healthy breakfast, friendly host and relaxing surroundings can provide a very high quality holiday. For tourists from another social group (e.g., top managers) the same room can appear of a very poor quality. Thus, quality can be related only to a specific target group.
It is not worth reducing the price below your client’s expectations. An interesting discovery was made in this respect. Sometimes little information is available about the details and quality, e.g. not a single accommodation in the region provides details about their services; websites give only ratesbut not full description. If the difference in rates is not significant for the clients (e.g., 33 euro or 44 euro per night), then the tourists assume that all the accommodations are of the same type, but the one with the highest price has the best quality while the lowest rate means the worst conditions and service. In this case, they choose the better quality for a slightly higher price. Therefore, when you set the rate, it is essential to keep in mind your target group, as the rate does not have to be the lowest one but has to be up to your clientele’sability to pay and their expectations of price. To attract the clients who will be satisfied with your service, always make more information available on details, quality and special things.
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Different Rates | 2.2. Marketing |
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