Fixed Pricing vs Dynamic Pricing: Which is Better in Market Turbulence?

img Jason Astono | February 6, 2025

Pricing strategies play a crucial role in determining the success of property investments, particularly in volatile market conditions. Investors and property managers often debate between two approaches: fixed pricing and dynamic pricing. Both have their pros and cons, but in periods of uncertainty—such as economic downturns, travel restrictions, or seasonal fluctuations—the ability to adapt pricing effectively becomes the key to maintaining revenue stability.

dynamic pricing

Hello, I’m Jason, a Business Journalist at Bukit Vista and in this article, we will explore the advantages and disadvantages of both fixed pricing and dynamic pricing, focusing on which approach is more effective in responding to market turbulence.

dynamic pricing
Fixed pricing is a static pricing model where the cost of a rental property remains unchanged regardless of market conditions. This strategy is often used by property owners who prefer consistency and simplicity over market-driven adjustments.

Advantages of Fixed Pricing:

  • Simplicity – No need to monitor market trends or make frequent adjustments.
  • Predictability – Easier to forecast revenue and plan finances.
  • Familiarity for Guests – Repeat guests appreciate stable pricing.

Disadvantages of Fixed Pricing:

  • Uncompetitive in Low-Demand Periods – When demand drops and competitors lower their rates, fixed pricing becomes too high, leading to lower occupancy.
  • Loss of Revenue in High-Demand Periods – Fixed rates do not take advantage of peak demand, resulting in missed opportunities for higher earnings.
  • No Flexibility – Market conditions change rapidly, and a rigid pricing structure fails to optimize revenue.

Example of Fixed Pricing in Action:

A villa in Bali is priced at $150 per night, regardless of demand.
  • During high season: Nearby properties charge $250 per night, but the fixed-priced villa remains at $150, missing potential revenue.
  • During low season: Competitors reduce their prices to $100 per night, but the fixed-priced villa remains at $150, leading to lower occupancy and lost bookings.
Failure to adjust pricing based on demand results in inefficiency in revenue management.
dynamic pricing
Dynamic pricing is a flexible pricing model where rental rates fluctuate based on real-time market conditions, such as demand, seasonality, competitor pricing, and booking trends. This method leverages data and automation to adjust rates accordingly.

Advantages of Dynamic Pricing:

  • Maximizes Revenue – Increases prices during peak demand periods and lowers prices to attract bookings in slow periods.
  • Competitive Edge – Adjusts rates based on real-time market trends, ensuring the property remains attractive to guests.
  • Higher Occupancy – By offering competitive rates, dynamic pricing helps maintain a steady flow of guests.

Disadvantages of Dynamic Pricing:

  • Requires Monitoring – Without oversight, prices can drop too low, reducing profitability.
  • Potential Price Volatility – Frequent price changes can confuse guests or lead to hesitation in booking.
  • Dependence on Algorithms – Some dynamic pricing tools make aggressive price adjustments, which may harm revenue if not properly managed.

Example of Dynamic Pricing in Action:

A luxury villa in Uluwatu uses an AI-powered dynamic pricing tool:
  • During high season: Prices automatically adjust from $200 to $300 per night due to increased demand.
  • During low season: The system lowers the rate to $120 per night, keeping the property competitive and occupied.
When managed properly, it optimizes revenue by capturing high-value bookings while minimizing vacant nights.

While fixed pricing may work in peak seasons, it ultimately fails in low seasons, resulting in significant revenue loss. A property using dynamic pricing has the advantage of higher occupancy in low seasons and higher revenue in peak seasons, making it the more market-sensible choice.

For property owners aiming for sustained profitability, dynamic pricing is the superior strategy, as it ensures the property is always priced optimally based on demand shifts. Fixed pricing, on the other hand, remains stagnant and fails to compete in a fluctuating market.

In a competitive rental landscape, dynamic pricing is not just a better option—it is a necessity for maximizing revenue and maintaining occupancy year-round.

Learn more about our Dynamic Pricing 

Fixed Pricing vs Dynamic Pricing: Direct Comparison

The key difference between fixed and dynamic pricing is adaptability. In market turbulence, where demand shifts rapidly, pricing flexibility becomes essential. Here’s how both strategies compare:
Fixed pricing offers stability but lacks revenue optimization, while well-managed dynamic pricing maximizes earnings by responding to market conditions. The biggest risk in market turbulence is a failure to adapt pricing.
Read more: Why Lower Rates Today Lead to Bigger Profits Tomorrow

Final Thoughts

Effective pricing is critical to maximizing revenue, especially in a turbulent market. A well-managed dynamic pricing strategy ensures that your property remains competitive, attracts steady bookings, and captures peak-season revenue while minimizing losses during low demand.
 
At Bukit Vista, we specialize in data-driven dynamic pricing that adapts to market conditions in real time. Our expertise in revenue management helps property owners achieve higher occupancy rates and increased profitability. By leveraging advanced analytics and industry insights, we ensure that your property stays ahead of the competition.

Take the First Step to Hassle-Free Property Management, Contact Us Today!

Bukit Vista is here to help you elevate your property and place you at the top 1%.

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