What is Derived Pricing and how do I set it up?

Are you already partner with booking channels such as Booking.com and Expedia? Then you might have come across the term derived pricing. Derived prices are rates that are dependent on other rates. The idea behind derived prices is that you, as a hotelier, need to manage less individual rates. A good example for commonly used derived prices are non-refundable rates or rates based on occupancies.

Let's say you have a double room that you offer for 100€ a night. You might want to give a 5% discount for corporate guests who stay alone. Instead of having to manage both rates independently, derived pricing enables you to make the single corporate rate dependent on the standard rate. If you decide to increase your standard rate due to an event in your city, the single use rate will adjust itself accordingly. 

In this example you can see how rates are derived from each other as a base rate.

In this image you can see what the result of the basic rate set up is on in the Rates and Availability overview.

The rate you set up in your accommodation key settings is the rate type with a basic rate. Of course you can always change this which can be done in the Rates an Availability overview.

How do I set up derived rates?

Here are the steps:

Go to your room types in your property settings (key-icon) 
In the room type you want to have a derived rate, choose the option "New Rate"
Fill the required details of the rate (Name, selling point, restrictions, etc.)
In the option "Derived from", choose from which rate you want the one you are creating to be dependent from
Choose if you want the change to be in percentage or in amount
Choose the amount/percentage of the change and this can be either an increase or decrease in the price. If for example you want to increase 5%, you would need to fill with a "5"; if you want to decrease 5%, you would need to fill with a "-5"

Good to know
It's easier to update rates when they are derived but if you have two groups of derived rates (one for OTAs and another for the booking engine), you can change the prices and restrictions in one group without changing the other. This way you can manage diferent conditions and prices depending on the season.
If you use the Yield tool in the base rate, it will update the price in the base rate and all the derived rates as well.
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