How to price your property – it’s by far the most complicated subject in running your Airbnb business. It’s an important one though. Choosing the optimal Airbnb pricing strategy can significantly improve your listing’s revenue. It’s mathematically impossible to calculate the perfect strategy. However, there are a number of guidelines that you can use to approach a perfect pricing schedule.
Implementing the advice on this page can significantly increase your income, so I suggest you spend some time reading and understanding the concepts introduced here.
Most hosts use the following strategy to price their listing. They look at a few similar listings in their neighborhood and price their space accordingly. They pick a number that feels “reasonable.” This number is then applied to all dates. A one-price-fits all strategy. If this sounds familiar, then you’re most likely losing out on a significant amount of revenue.
My Airbnb Pricing Strategy
I’m going to give you a pricing strategy that easily beat the one-price-only strategy. It’s based on the idea to assign a high price a long time before the check-in date and gradually lower it as you move towards the check-in.
Step 1: Establish your maximum price
Look at the best alternative accommodation available on Airbnb. Go into the search algorithm and ask yourself the question from the guests perspective: if I couldn’t stay at my own space, where would I stay instead? Take the price of that listing and add 25% on top.
Step 2: Establish your minimum price
What is the minimum price that you will accept for your property? You can base this on the marginal cost of a guest staying at your place. The marginal cost is equal to the costs that you incur as a result of someone using your property for one night versus leaving it unoccupied, i.e. electricity, gas, water, check-in and cleaning costs (if you don’t charge extra for cleaning.)
You may come up with a very low number that you feel like isn’t worth the hassle. In that case, you can increase the minimum price by an amount that you want to be compensated for as management costs. However, keep in mind that having an extra booking and a positive review will help you attract more guests in the future. This is particularly important when you’re just starting out and don’t have a solid reputation yet.
Step 3: Calculate your pricing strategy
Let’s say you’ve set your maximum price at $250 and your minimum price at $30. Set your prices according to the table below.
If you think it’s to much work to keep adjusting your prices this way, you can simplify it by lowering your price less often with bigger steps. The important thing is to start with $250, to give guests who are willing to pay that much the opportunity to pay this price and to lower it down all the way to $30 last minute, to make sure you’re reaching near 100% occupancy and benefit from the long term effects of the reviews that this will give you.
Pro-tip: Instead of trying to figure out what the best Airbnb pricing strategy is, you can save yourself a lot of time by leaving it to the experts: Everbooked. This automated pricing app directly links to your calendar and updates it every day with optimal prices. Their algorithm calculates these prices based on large sets of data. Their clients see between 10 and 40% revenue increase after signing up.
Special offer: sign up for Everbooked now and get the first 90 days for free with no obligation to renew!
Try it first: See your listing’s prices in the Everbooked pricing demo.
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