You don’t need to be graduated economist to understand that the lower you drop your price the higher the demand you will get. Well, that it isn’t always true (at least it wasn’t for me). It happens to me a lot of times than MOVING UP my prices gave me more bookings than before. So by doing the complete opposite of what anyone would do when they don’t have bookings I got better results in the end. I’m sure there is psychological factor that affects the guest’s mind telling them that for this cheap rate I will mostly get a crappy place.
I don’t’ have a solid background theory to say what I’m saying but it is just what I learned from the experience of playing with my rates for a while. I believe the guest gets confused and uncertain to book with you when they feel that your rates and what he would pay for your place are not in sync. They might think that your offer is too good to be true so there should be some hidden aspects of your listing that justify your cheap rates and if you cross that line further you might become a target for the group of people that chase just a good price (no matter the quality) so you start getting much more requests for discounts than before. YES, your price is already low and you get more discounts because this people just want to pay the less they can.