Pricing your place is one of the most important decisions you make as a host. It’s also one of the most complex decisions you will make. For some expert insights, we invited our friends from Everbooked, the provider of automated pricing services, to share a few Airbnb pricing tips on the subject.
Tip One: Price your place relative to alternatives
Price your place relative to alternatives your desired audience is likely to consider. Do a search on Airbnb matching your place in terms of room type, and a broad price range. Note how many listings are returned in the search results. For example, a search in NYC for a private room for two between $200 and $400 returned 304 results.
Returning to our example of NYC, select Mid-Town if that is your location. A search like that returns 59 alternative listings.
Make a note of the prices and bookings for the top listings by scanning the calendars of those that match yours most closely on the key attributes and that have a similar look and feel. Those listings that are booked at about an 80% level for the next month or so (or whatever the normal booking window is in your area), may be priced about right.
Tip Two: Set your price at a discount to the top listings
You will not likely have the pricing power of the top listings until you rise in the search ranks. If you set prices to match the top search ranked places, you can expect to have fewer bookings. One way to rise in search results is to gain more five star reviews. Once you have gained more reviews or you are gaining the booking levels you want within the time frame desired, you can start raising your prices. In the meantime, price your place at a discount of ~15-20% to the top alternatives the ideal guest searching for a place like yours would consider.
Tip Three: Avoid setting your floor price too high
A common mistake we see is hosts setting their floor prices too high. There seems to be a pride factor that comes into place here. Think of your available nights as perishable inventory. If you were a baker would you rather throw out your cupcakes at the end of the day or sell them at half off? It’s the same with your place.
What you need to figure out is what costs you incur to have your place occupied for the night. Those are the things like consumables, electricity, the gift of wine you give each guest etc (but not costs that you have to pay regardless of whether you have guests or not, like internet service, property taxes, mortgage payments or rent you pay to your landlord).
Once you know the costs you incur each time you have guests, add a reasonable margin for your time and set that as your minimum price. You may gain more bookings and five star reviews this way which can be of greater value than extra profit when you want to rise in Airbnb’s search rank.
Don’t forget you also having your cleaning fee to set and collect, which depending on your cleaning costs, may also bring you some profit.
Tip Four: Monitor net demand and vary prices accordingly
Constantly monitor key demand factors and increase prices when demand rises above average, lower prices when demand decreases below average.
The ‘demand factors’ that influence a specific location and type of property, include:
- Hotel Demand
- Nearby Airbnb Booking Rates
- Day of Week
- Events & Holidays
Depending on your estimate of the impact from each of these factors, raise or lower your prices relative to your average price or use a service that takes into account all of these factors and automatically generates prices.
Tip Five: Consider using an automated pricing service like Everbooked
If you answer ‘yes’ to any of these questions, you might want to consider becoming an Everbooked empowered host:
Is your listing in a location with lots of alternative Airbnbs? yes / no
Do you want to avoid leaving money on the table by underpricing? yes / no
Do you want to capture more near term bookings? yes / no
Does your city hold major events that attract lots of people? yes / no
Would you like to have all of this done for you automatically? yes / no
To Wrap Up:
Price your place relative to the top alternatives that your ideal guest might find appealing. If you’re just starting out, have few reviews or are lower down in Airbnb’s search results, price at a discount to the top choices. Put your pride aside and avoid setting too high a floor price, especially when you’re building your reputation.
Use the Airbnb pricing tips above with or without Everbooked and start earning more money and gaining more time to do the things you want to do for your guests and with your life!
Special offer: sign up for Everbooked now and get the first 90 days for free with no obligation to renew!