How to fix the error 'Starting Price is lower than Min. Price'?

INTRODUCTION

Pricepoint empowers hotels to optimize their prices based on a wealth of data. However, sometimes even the most experienced users can make a common error in pricing configuration. This article will address a prevalent issue: Starting Price is lower than Min. Price. Let's explore why this error occurs, its impact, and how to quickly correct it.

UNDERSTANDING THE ERROR

This error is represented in the Pricepoint Calendar by a red background.

Under the default Pricepoint configuration, the price recommendations can fluctuate up or down by 40%. Nonetheless, users have the option to adjust this lower limit by changing the Min. Price value.

While users have the flexibility to set any desired value, we don't recommend leaving less than a 20% difference between the Starting and Min. price.

Below are some different scenarios and their respective impact.

a) This is the optimal scenario as it allows Pricepoint for the most flexibility.

b) This is an acceptable scenario for periods when you want to limit price discounts while still allowing Pricepoint for some flexibility.

c) These are problematic scenarios as they'll result in stagnant, unchanging price recommendations for affected dates, which is counterproductive to the dynamic pricing system's purpose.

NOTE: In this case, Pricepoint does recalculate your price as you receive bookings. However, as it starts the optimization from the Starting Price, most of the new price recommendations will be below the Min. Price and therefore won't be applied.

WHY IT HAPPENS

This is a common configuration mistake that happens when users want to change the Min. Price value, but forget to consider the Starting Price when performing the adjustments. See the hypothetical situation below.

"There will be a music festival in my town during the last 2 weeks of November and I don't want to sell these rooms for less than R$450."

There are a few options to achieve this goal. While the first one might sound like the easiest option, it can be problematic. So you can also see options 2 and 3 as a good example of how to approach such situations.

⛔ 1. Change Min. Price to R$450

By changing the Min. Price to R$450, we're making it higher than the Starting Price for weekdays and the same value for weekends, resulting in the scenario (c) described above.

✔️ 2. Change Min. Price to R$450 and increase the Starting Price

By changing the Min. Price to R$450 we're avoiding selling for less than this amount.

By increasing the Starting Price to $565, for example, we're still leaving a margin of 20% for Pricepoint to work with.

✔️ 3. Add an event

In this particular case, as we're talking about a music festival, adding an event would be the best option.

The event will allow us to increase both, the Starting and the Min. Price by a fixed monetary value or percentage, making sure that we won't sell for less than R$450 and still allowing Pricepoint to fluctuate the prices.

In this case you would have to check your current Min. Price before calculating the event price increase. 

FIXING THE ERROR

Once you detected the dates when the Starting Price is lower than Min. Price, you have several options to fix it. The 2 easiest options are:

a) Increase the Starting Price, making sure that the Min. Price will be at least 20% lower.

b) Decrease the Minimum Price, making sure that it'll be at least 20% lower than the Starting Price.

To change the Starting or the Min. Price for selected dates you can use the Bulk Update tool and follow the steps below.

1. From the Calendar, click on Bulk Update.

2.Select the room type and dates for which you would like to make the changes.

3. Choose whether to change the Min. or the Starting Price and enter the new values.

4. Click Run.

Correcting the 'Starting Price is lower than Min. Price' error is essential to ensure your dynamic pricing strategy functions as intended. By maintaining the recommended minimum difference between Starting and Minimum Prices, you'll harness the full power of Pricepoint's dynamic pricing capabilities, allowing your hotel to stay competitive and responsive to market dynamics.