How to Outsource Revenue Management Without Losing Control

Why Outsourcing Revenue Management Goes Wrong

If you want to outsource revenue management in your business, you need to set yourself up for success. Otherwise, it can be very costly.

Welcome back to Get Paid for Your Pad. It is Monday. This is an episode of Rev Up, where we give you insight behind the scenes of our revenue management service at Freewyld Foundry and tips on how to improve your revenue management. Today we're covering a different but very important topic: how to outsource revenue management successfully.

If you don't set yourself up for success and it doesn't work out with the person you hire or the revenue management company you work with, you can waste a lot of time and money. I know this because all the companies applying for our revenue management service, over a thousand at this point, go through an audit. We get information from them about how they've been doing revenue management, what the results have been, and we get a peek into their pricing tool. What I see a lot is companies that hired in-house or worked with a service provider and it was a disaster. They lost a ton of time and money. The goal of this episode is to help you prevent that.

Revenue Management Is a Specialized Role

The first thing you have to understand is that revenue management requires a very specific skill set. You need strong analytical skills: working with numbers, reading graphs, thinking in percentages, interpreting data, and making smart pricing decisions based on that data. In hospitality and short-term rentals specifically, the industry doesn't necessarily attract the most analytical-minded people. Revenue managers with real STR experience are rare and hard to find.

The $1M to $10M Challenge

Most of the operators who struggle most with this are doing between $1M and $10M in booked value annually. Here's why.

If you're very small, say five listings and a couple hundred thousand dollars in bookings, it doesn't take much time to do revenue management. As a founder, you can educate yourself, get some training, and do a reasonable job even if numbers aren't your strongest skill.

If you're really large, $15M, $20M, $25M or more, you have the resources to build an in-house team. That makes sense at that scale.

But in the middle, it becomes challenging. The business is too large for you as a founder to wear every hat. You're focused on marketing, business acquisition, operations. Revenue management is one of the first things worth outsourcing because the difference between a good revenue manager and a bad one can be 20, 30, even 40% in revenue. That goes straight to your bottom line with no additional investment.

Before You Outsource: The Right Mindset

Regardless of whether you hire in-house or work with a service provider, there are two things you need to get right before anything else.

The first is being emotionally ready to let go. If you've been doing revenue management yourself, you know your market and your units. It's not easy to trust someone else to do a better job. But if you force your perspective on whoever you hire, you won't get the best results. You might as well keep doing it yourself.

The distinction here is between leading and micromanaging. Micromanaging means telling someone exactly what price to set, constantly looking over their shoulder, giving instructions on every decision. Leading means holding the person accountable to results and giving them what they need to succeed. If you think you know best, don't outsource. But if you're going to hand it off, let that person do their job.

The second is setting real boundaries, not opinions. Communicate the actual constraints in your business: minimum prices required by owners, turnover restrictions on holidays, no same-day bookings if your operations can't support it. These are legitimate constraints. But challenge yourself on whether what you're calling a boundary is actually just a personal opinion about how pricing should work. The more freedom your revenue manager has, the higher your revenue will be.

Hiring In-House: The Full Checklist

Hiring is a lot of work, but it's worth it. Going fast and choosing wrong costs far more than doing it right the first time. A book worth reading before you start: "Who" by Geoff Smart and Randy Street.

Write a clear job description

Get specific about responsibilities, expectations, and the type of person who will succeed in the role culturally, not just technically.

Build a real application process

Don't just search Upwork, find someone, do a 20-minute Zoom call, and hire them. Do multiple interviews and at minimum two test tasks. You want to dig deep into their experience, challenge their thinking, and verify they're actually a culture fit.

Have an onboarding process

When the person starts, they need to understand your company, your goals, your values, the systems you use, and how you work. Don't drop them in and say "do your job."

Create training if needed

If you're strong at revenue management yourself, you may want to document your approach so the hire can learn your standards.

Set up accountability

Before you hire, decide how you'll keep this person on track. Monthly evaluation? Weekly check-in? What are their working hours? What happens if they don't show up? Know the answers before it happens so you respond rather than react.

Plan for time off and gaps

Revenue management doesn't stop on weekends. If your hire is Monday to Friday, you need someone monitoring what's happening on Saturday and Sunday, even if it's just you doing a quick check. Also think through what happens when they get sick, go on holiday, or quit. Contractors can leave with no notice. We've experienced this, and it's very disruptive without a plan.

Don't hire cheap

A great revenue manager can earn six figures. If you hire someone at $20,000 a year, they're probably not great, because the opportunity to earn $100,000 or more is out there and real operators offer it. We've hired revenue managers who took a pay cut from $120,000 or $130,000 at their previous company because they were excited about our vision. If you pay for the cheapest option, you get what you pay for. If you're doing $2M in bookings and your hire costs you 10% in underperformance, that's $200,000 in lost revenue.

Working With a Service Provider

There are around 150 companies in the PriceLabs revenue management directory. Most are small, some are one-person operations, and unfortunately most are not great. When a big opportunity emerges in an industry, it attracts opportunistic people trying to move fast. So you have to be careful.

Evaluate their track record

How long have they been in the space? How many clients and listings do they manage? Are they operators themselves? Understanding how a short-term rental business actually works is critical for a revenue manager. If a unit stops booking and they don't know to check for a recent bad review before dropping prices, they'll misprice the whole calendar. At Freewyld Foundry, we hire from the hotel industry and put people through STR-specific training because the talent pool in our industry simply isn't large enough.

They must manage pricing in your tool, not theirs

If a service provider manages your listings in their own pricing account and doesn't give you access, that's a red flag. You lose visibility into what they're doing, and if you want to leave, you face a complicated transfer process. We've gone through that process taking on clients from other providers and it's painful. If they manage in your account, you can stop the service at any time with no obstacles. Think of it like a restaurant with an open kitchen: if you can see what's happening, you can trust it.

Expect real customer support

Revenue management is a team effort, especially in the first few months. Your service provider needs input from you: your owners' preferences, your operational constraints, your local knowledge. That requires daily communication, not a three-day email response window. We use Slack with every client for daily contact and do weekly or biweekly Zoom calls to review performance, ask questions, and maintain the relationship.

Require a live dashboard

A monthly PDF report is not enough. Every day, new bookings come in and performance changes. You need a dashboard you can check whenever you want to see how your portfolio is pacing, not just a summary at the end of the month. And make sure the reporting shows the right KPIs: comparable units year over year, not total portfolio growth. If your portfolio doubled since last year, of course total revenue is up. That doesn't tell you anything about how well the revenue management is performing. Look only at units that were active the same time last year.

Final Thought

None of this is complicated, but it does take effort upfront. That effort is worth it, because hiring wrong or working with the wrong company and having to start over costs far more than doing it right the first time. Every company is different, and what works for one operator may not be the right fit for another. The goal is to make better decisions so time and money stop getting wasted.

If you're interested in applying for a free revenue report from Freewyld Foundry, you can do that at freewyldfoundry.com/report. We'll give you an honest assessment of your portfolio's performance, where the opportunities are, and whether we think we're a good fit to work together.