Having a robust hostel pricing strategy is essential to a hostel's profitability. You want to find the price that gives you a competitive edge but isn't too high to scare away potential guests. It will depend upon the hostel location, the type of guests, your competitive set, how well your hostel is rated and market trends. 

We'll look at pricing strategies in more detail and offer tips to ensure you're pricing your hostel for success.

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What are hostel pricing strategies?

Hostel pricing strategies aim to optimize prices and inventory to maximize revenue. The most common are dynamic pricing strategies and customer-, competitor- and cost-based. Hostels can optimize availability and prices by analyzing the percentage of sales of each type of bed and room during a specific period. 


Customer-based pricing adapts the prices to the customer type. It considers the customer’s perceived value of the hostel room when selecting the best price. Corporate and groups have their own rates, while regular guests can access the best available rate, which generally changes according to market conditions.


Cost-based pricing sets the price of the hostel room based on the total costs, including the fixed and variable costs involved in selling and keeping a room maintained. From there, you add the profit you want to gain to calculate the selling price.


Competitor-based pricing involves setting prices depending on your hostel's comp set. You'll need insights and data about your competitors' daily rates to figure out the price range within which to operate. Don't aim too high or too low because you risk pricing your hostel out of the competitive landscape.

Dynamic pricing 

Dynamic pricing is generally based on supply and demand. You want to anticipate demand through real-time data and forecasting to understand the ideal price and maximize profitability. Hostels apply dynamic prices during high, shoulder and low seasons. Some hostels charge more on weekends or during special events or local holidays.

tips for price strategies for hostels

Best 8 tips for price strategies for hostels 

Now that you understand the different strategies for setting hostel prices, let's explore the most efficient pricing practices.

Avoid overbooking

Some hostels use overbooking to optimize revenue and occupancy rates. This shows to be a bad strategy when guests arrive at a hostel after a long trip and find their bed has been taken. When you neglect trust, guests will never return, despite your competitive prices.

Ensure a high occupancy and average price

In periods of high demand, keep track of all the previously booked rooms and adjust the price of the still available rooms on all distribution channels. The remaining beds can be offered at a premium price.

Consider rate parity

Offering a lower price on your direct channels is tempting because you're getting more margin, but rate parity is crucial to your hostel's reputation. Your customers should see the same prices across all channels – you can always offer added value through free additional services or upgrades. Promoting these benefits will encourage guests to book directly.

Utilize pricing psychology to your favor 

There's a reason marketers price at $39.99 instead of $40.00. Psychologically, it feels like we're getting a deal. Leverage this by using odd instead of flat prices. It may seem silly, but it works.

Make your unique selling proposition clear

This is essential if you're among the higher-priced hostels in the area. Whether you offer free breakfast, ensuite bathrooms, or extra soft mattresses, having clear USPs will distinguish your hostel from the competition and attract the right audience.

Know who your ideal client is

Want to attract the right audience? You need to know who they are and what they're looking for. Once you understand their motivations, you can customize your offer to attract this type of client. Segmentation helps you set the right price by giving you an idea of what the guests might be willing to pay.

Don’t mark down prices, add value instead

Instead of driving prices down during periods of low demand, why not add extra value to fill empty beds? Try these: free luggage storage, early check-in, or upgrade to a room with an ensuite bathroom. These services can be offered at little added cost without affecting your revenue.

Use technology 

Smart hotel technology like Mews can help you determine the best rates using real-time data. It allows you to better forecast changes in demand and stay on top of your hostel game with competitive prices that invite growth.


Hostel pricing strategies can determine the success of your property. Cost-, customer- and competitor-based pricing are some of the most commonly used ones, along with dynamic pricing. While each has advantages and disadvantages, adopting the right strategy will help you reach long-term success through profitability and customer satisfaction.