Unit 3 · Creating Your Pricing Strategy · Lesson 3.8
Defining your hedge price
The hedge price is your last-minute floor: the absolute minimum weekday and weekend rates you will accept once most of the market’s demand for those dates has already been booked. For a new listing you set it from market occupancy and comp set percentiles. For an existing one you also weigh your own booked rates, provided your track record earns that weight.
The full lesson text below is an edited transcript of the video, published 2026-08-24. The complete course is free at the playbook.
What the hedge price is for
The hedge step is the last-minute end of your pricing strategy, and its job is to fill whatever gaps are left in the calendar. That usually means putting an attractive price in front of the guest. By the time dates fall inside the hedge window, most of the occupancy the market was ever going to produce has already materialised, so what remains is limited demand and a small pool of potential bookings. Being as competitive as you can be for that remainder is the whole point of the step.
The counterweight is that the hedge price still has to make financial sense. Do not price lower than your costs allow, or the bookings you win at the bottom of the calendar will cost you money to host. Attractive is the goal. Unprofitable is not.
What absolute minimum means
What you are defining at this step is an absolute minimum price for weekdays and an absolute minimum for weekends. Both words carry weight. Absolute, because the hedge step should be the cheapest position you take anywhere in your pricing. Minimum, because the number is a threshold rather than a forecast of what you will earn.
Depending on occupancy levels and your comp set’s prices, the figure you land on can feel uncomfortably low. Remember what it is: your price floor, the level you refuse to go below. Once the strategy is running, dynamic pricing tools such as PriceLabs move the nightly rate above that minimum as demand levels justify it. The minimum is where your prices start from, not where they stay.
Where the percentiles fit
Because the low season is the basis for this number, the hedge minimum generally sits at a low price position relative to the comp set. Comp set prices are demarcated by percentile: the 25th percentile at the lower end, the 50th as the median, and the 75th through to the 90th covering the upper ranges.
The strategy sheet’s three-step pricing tab shows the average price within each of those percentile ranges, together with a recommended price derived from occupancy levels and those same comp set prices. The recommendation assumes a neutral approach, so treat it as a starting point. You can go more conservative, meaning a lower price, or more aggressive, meaning a higher one, depending on your own assessment of the dates.
A new listing, worked through
Take a set of low season dates already nominated and entered in the strategy sheet. Because those dates sit in the past, the market occupancy for the period is known: an average of 7.58% on weekdays and 25.79% on weekends.
Occupancy that low points towards a conservative price before you look at anything else, and the sheet’s recommendations agree: $119.63 for weekdays and $232.93 for weekends, both of them below the 25th percentile prices for the comp set.
The recommendations make sense once you translate the percentages. A 7.58% average occupancy means only seven or eight listings in every hundred are expected to get booked at all, and 25.79% means roughly 26 in every hundred. Then remember where the hedge step sits: most of that occupancy has already materialised, so the sliver of potential occupancy still available is smaller again. Guest behaviour at this end of the booking curve is typically price sensitive, with a clear preference for the cheapest properties, which is exactly why conservative is the right instinct here.
Agreeing with the recommendations, you would copy them across into your defined minimum price, rounded to the nearest ten: $120 for weekdays and $230 for weekends. The rounding is practical rather than mathematical. Clean figures are far easier to spot later, when you are scanning a pricing calendar for the dates that have dropped to your minimum.
Bringing your own booked rates
For an existing listing the process is the same in structure: market occupancy and market prices still drive the decision. What changes is that your own booked rates come into it, so your historical performance carries some weight rather than the market data deciding on its own.
Your listing’s booked rates, for the selected low season and for the same period a year earlier, appear in the control price calculations table of the three-step pricing tab. Before you lean on them, decide whether they deserve to be leaned on. Booked rates are a sound basis when you have been operating for a significant amount of time, have had decent occupancy, and have been performing at or above the market averages. If your listing does not meet those conditions, you are better off treating it as a new listing and pricing from the market data.
Where you have had decent occupancy at levels similar to the market average, choose a price below what has worked for you in the past. The reason is the one that governs the whole step: the hedge price exists to fill the availability you have left.
An existing listing, worked through
Same sheet, same low season dates, same comp set data, with average booked rates added: $236.45 on weekdays and $304.60 on weekends. Those prices came with decent occupancy, which makes them a reasonable basis for the decision.
Working down from them by roughly $40 gives a weekday minimum of $190, slightly underneath the 25th percentile, and a weekend minimum of $270 on a similar increment, which lands slightly above the 25th percentile.
Notice that both sit above the sheet’s recommendations, most obviously on weekdays, where $190 stands against a recommended $119.63. That gap is what factoring in your own booked prices buys you: a qualitative judgement about a listing with a track record, rather than a decision taken from market data alone. Those booked averages align more naturally with the control price, whose timeframe produced them, which is a further reason the hedge number sits below them.