What is Lead Time Pricing?

Lead time pricing is the practice of adjusting your vacation rental rates based on how many days remain until a guest's arrival date. It's one of the most powerful—and most misunderstood—tools in the revenue optimization toolkit.

Here's the core insight: guests who book early and guests who book last-minute have fundamentally different price sensitivities. The planner who reserves 60 days out is budgeting differently than the spontaneous traveler booking tomorrow. Your pricing should reflect this reality.

But there's a right way and a wrong way to implement lead time pricing. The wrong way—aggressive discounting as dates approach—can actually hurt your revenue. The right way involves understanding occupancy targets, discount limits, and the psychology of both guests and algorithms.

The Calvin Tran Rule: 75-55-35 Occupancy Targets

Calvin Tran, one of the most respected revenue strategists in vacation rentals, developed a framework that we've found invaluable: occupancy targets by time horizon.

The 75-55-35 rule works like this:

Why these specific numbers? They're based on booking velocity patterns across thousands of properties. Most vacation rental bookings happen in the final 2-3 weeks before arrival. If you're at 35% occupancy 30 days out, you're actually on track—the rest will fill naturally.

The mistake operators make is panicking at 30 days when occupancy looks low. They slash prices, train guests to wait for discounts, and cannibalize their own future bookings.

The 3 Lead Time Buckets

Bucket 1: Close-In (0-7 Days)

This is where aggressive discounting makes sense—but "aggressive" doesn't mean what most people think.

If you're below 75% occupancy with a week to go, discounts of 10-15% are appropriate. The goal is to convert those remaining nights into revenue, because an empty night generates exactly $0.

But there's a critical limit: never drop more than 15% at once. More on why in a moment.

Close-in bookings often come from spontaneous travelers, business trips that just got confirmed, or locals looking for a staycation. These guests have less price sensitivity—they need something NOW—but they're also comparing options actively. A reasonable discount can tip the decision.

Bucket 2: Mid-Range (8-14 Days)

Two weeks out is the inflection point. This is when most guests start seriously planning, but they still have alternatives if your price doesn't work.

Target occupancy here is 55%. If you're significantly below that, consider discounts of 5-10%—enough to be competitive, but not desperate.

At this stage, you're competing not just on price, but on value. Your photos, reviews, and amenities matter as much as the discount. A 5% discount on a well-presented property often wins against a 15% discount on a mediocre one.

Bucket 3: Far-Out (15-30 Days)

Here's where patience matters. At 15-30 days out, your target occupancy is only 35%. Being half-empty is actually fine.

If you're slightly below target, consider very light discounts: 2-5% maximum. Any more and you're giving away revenue that would have come anyway.

Think about it: the guests who book a month out are planners. They're budgeting, coordinating with travel companions, maybe booking flights and activities. They're going to book regardless—you don't need to discount to win them.

Beyond 30 Days: Hold Your Rates

Never discount beyond 30 days. Full stop.

The booking window hasn't even opened yet. Guests booking this far out are either: (a) planning a major trip and will pay your rate, or (b) flexible enough that discounting won't change their timeline.

Early discounts train the market to wait. If guests know you'll drop prices, they'll hold out. This creates a self-fulfilling prophecy of last-minute discounting.

Why Big Discounts Backfire

Here's something most operators don't know: Airbnb's algorithm punishes aggressive price drops.

When you drop your price more than 15% at once, Airbnb's system interprets this as a signal that something might be wrong with your listing. Maybe there's a problem with the property. Maybe you're desperate. Either way, the algorithm responds by suppressing your search visibility.

You'll see the "Price Drop" badge appear, which sounds good—but the underlying ranking penalty often outweighs any benefit. We've seen properties lose bookings after aggressive discounting because they stopped appearing in search results.

The math is counterintuitive: A $200 night discounted to $160 (20% off) often performs worse than the same night held at $185 (7.5% off). The smaller discount maintains visibility while still appearing competitive.

Over a year, this adds up. Properties that implement the 15% guardrail typically see $5,000-$9,000 more revenue than those using aggressive discounting.

When to Break the Rules

Every rule has exceptions. Here's when more aggressive lead time discounting makes sense:

Local Events with Known Patterns

If you're in Austin and SXSW just ended, the week after is predictably slow. Everyone knows this. Discounting makes sense because the demand simply isn't there—and won't materialize no matter how long you wait.

Similarly, San Diego's "June Gloom" (foggy coastal mornings) suppresses early-summer demand. Properties that price flat through this period leave money on the table in peak summer AND miss opportunities during the shoulder.

Weather Windows

Weather affects booking velocity. A forecast of rain for the upcoming weekend? Close-in discounts become more necessary. A heat wave in a typically mild market? Demand spikes—hold your rates.

Automated pricing systems struggle here. Human judgment (or sophisticated weather-integrated algorithms) can capture these micro-opportunities.

Orphan Gaps

A one-night gap between bookings deserves special treatment. These "orphan gaps" are often unbookable at standard rates because of minimum-stay requirements or guest preferences.

For orphan gaps, more aggressive discounting makes sense: reach out to guests on either side offering 40-50% off for an extension. You're not devaluing your listing—you're monetizing nights that would otherwise be empty.

(We have a separate article on orphan gap strategy if you want to go deeper.)

Automation is Key

Manual lead time pricing doesn't work at scale. The windows are too short, the calculations too complex, and human attention too limited.

At 2 AM when you're sleeping, your competitor's automated system is adjusting tomorrow's price based on overnight booking velocity. By the time you check in the morning, you've already missed the opportunity.

Our Golden Engine runs daily at 6 AM, recalculating lead time discounts for every property based on:

The 15% guardrail is hard-coded—you can't override it. If the market says drop 25%, we spread it over multiple days to maintain search visibility.

Weekend vs. Weekday Lead Time

One more nuance: weekends and weekdays have different lead time characteristics.

Weekday travelers (often business or necessity bookings) tend to book later. They're also less price-sensitive—the trip is happening regardless. Weekday lead time discounts should be more conservative.

Weekend travelers (leisure, getaways, celebrations) book earlier and are more price-sensitive. They're comparing options, and a discount might tip the decision. But they also have higher baseline demand—don't discount prematurely.

Our rule of thumb: whatever discount you apply to weekdays, apply 75% of that to weekends. A 10% weekday close-in discount becomes 7.5% on weekends.

Putting It All Together

Lead time pricing isn't just about reacting to low occupancy. It's about understanding the natural booking cadence of your market and making calculated adjustments.

The framework:

  1. Set occupancy targets by time horizon (75-55-35-0)
  2. Only discount when you're meaningfully below target
  3. Never exceed 15% discount in a single adjustment
  4. Apply weekday/weekend differentiation (75% rule)
  5. Automate everything—human consistency can't match algorithms

Properties that implement this framework consistently see 15-25% revenue improvement over those using aggressive discounting or static pricing. The difference compounds over months and years.

Get Your Lead Time Strategy Audited

Want to see how your current approach compares? We offer free pricing audits that analyze your lead time patterns and identify specific opportunities.

You'll see exactly where you're leaving money—and what changing your approach could mean for annual revenue.

Request Free Audit