One of the biggest challenges when first placing a listing on Airbnb is determining your nightly rate. Pricing on Airbnb can vary greatly from property to property. It can be overwhelming to take it all in and jump into action. You may be tempted to just choose a random price just to see how things work out. However, it’s a much better idea to analyze the other properties and hotels in your area. By scoping out your competition, you’ll be able to set pricing for Airbnb that gives you a great chance for success.
Setting Your Airbnb Listing Price
To begin the Airbnb pricing process, it’s essential to take a close look at your competition in the area. This includes not only other Airbnb properties, but also hotels that are close by. Oftentimes travelers will select the cheapest option, whether that’s an Airbnb or a hotel. Because of this, you’ll definitely want to examine both types of accommodations.
It is important to note that strategically setting your pricing on Airbnb can make a huge difference in your overall earnings and success! While 60% of your property’s value comes from its location and quality, 40% comes from its pricing on Airbnb. That gives you a huge opportunity to improve your earnings, simply by selecting the best pricing for Airbnb.
Determine your Pricing using your Local Airbnb Market
Conveniently, you can use the Airbnb search function as an easy way to do your own research. When trying to figure out Airbnb pricing, it’s a good idea to compare your property to others in the area that are similar. You can do this by limiting your search to properties that have the same number of bedrooms and maximum amount of guests.
Next, keep in mind that it’s best to conduct your search as if you were trying to make a booking in the future. If you search the listings that are available within the next day or so, the more popular listings may already have been booked and won’t show up. You want the full picture of all of your area’s listings so that you can see the range in price as well as the range in property style. For best results, you should search with various parameters. One search round should be for a trip that is four to six days long. Try yet another search that simply focuses on weekends. Because the Airbnb platform is so flexible for hosts, you will want a clear picture of who is in your neighborhood and what they are charging during the week vs on the weekends.
Now it’s time to check out each property, taking note of the top five that are most comparable to your own. Once you have a list of properties that are similar to yours and in the same geographical area, you’ll want to write down the different amenities each property offers. Another good rule of thumb is to search with your own property centered on the map. Slowly zoom out until you see about a dozen properties. Then write down each property’s Airbnb pricing and any deals or coupons they have available for guests.
With all of this information onhand, it will be much easier to see your own property in the context of other Airbnbs. This way, you’ll be able to estimate your listing price much more accurately.
Further Research your Pricing using Local Hotel Rates
While your first plan of action is to scope out your competition on Airbnb, it’s also very important to take a look at local hotel rates! Many travelers are open to both Airbnb or commercial accommodations. By reviewing the local hotel and motel rates, you will have a much better understanding of your market rates. Don’t assume that hotel/motel necessarily means better. Many travelers are well-versed in the opportunities Airbnb stays bring to them.
In addition, you’ll want to check several different websites to gauge the prices and demand of hotel rooms in your area. Orbitz, Booking.com, and Expedia are all good sources to take a look at. Not only will you be able to view the nightly rates, but you will also be able to see how the pricing fluctuates. There will be times when events may be occurring around town that will increase the price and drive the demand. It is often quite difficult to stay on top of all the activities going on in your area so reviewing these sites is an excellent way to stay in the know.
Utilizing Pricing Tools
Figuring out how to price your Airbnb listing can be quite cumbersome. Even after you pick your price, you will most likely want to continue to research the market rates to stay current with the times. For some hosts, this may be time consuming or confusing. There are tools that can help you to price your listings and will help to adjust your pricing to be in sync with potential daily rate changes due to weekends, events or holidays.
Airbnb has a feature called “Smart Pricing”. When activated, the goal of this tool is to constantly survey the market demand for Airbnbs against the current supply. In addition to the tools Airbnb provides, there are also outside sources. Dynamic pricing tools exist online, which we’ll discuss below. Aside from pricing, you’ll want to take a look at our article about the five things you must do when hosting an Airbnb.
Airbnb Smart Pricing
As mentioned above, Airbnb has a tool called Smart Pricing that you can use to automatically adjust your listing price with the going rates. Rather than doing the research and math yourself, Airbnb can do it for you. All you have to do is set a minimum and maximum price for your property. Then the Airbnb pricing calculator takes many different factors into account. Finally, Airbnb Smart Pricing sets your property’s price within the range you provided. Your pricing for Airbnb will automatically fluctuate if you choose to use the Airbnb Smart Pricing tool.
However! The Airbnb Smart Pricing tool can be a dangerous weapon. It is not recommended you use this tool until after you understand your pricing strategy. If you do not have your parameters set up properly, you could be setting yourself up for a very low nightly rate. Airbnb Smart Pricing is a feature that you may or may not wish to use. As discussed in Airbnb Host Step 3 – Get Ready for Guests!, Airbnb Smart Pricing can be a very handy tool, but not fully understood, can work against you. Use wisely!
Using AirDNA to Set Your Price
While AirDNA isn’t free to use, it’s extremely valuable in helping you set your Airbnb pricing rates. AirDNA is a product that provides you with a treasure trove of information about trends and rental prices in your area. Real-time future demand and evaluation of your property’s performance are also included. If sitting down for a few hours and examining the market yourself isn’t something you’re interested in, AirDNA could be a good choice for you.
Aside from AirDNA, there are lots of other dynamic pricing tools on the market that you can try. Beyond Pricing, PriceLabs, and Rented.com are some great options if you’re interested in receiving a full report on the properties and Airbnb pricing in your area.
Airbnb Pricing Strategies
It is important to always remember that part of the reason one decides to go the hosting route as opposed to the traditional renting route is the increased opportunity of increased income. As detailed in Airbnb vs. Renting: Which Is the Best Choice for You?, this income opportunity should be taken advantage of! Listed below are some strategies to ensure you get the most profit for your listing.
Adjust Prices Frequently
Take note that setting a permanent rate isn’t the best way to earn money. At any given time, you may be undercharging or overcharging your guests. When you undercharge, you are hurting your own pockets. Overcharging will result in a lowered occupancy rate which will also be reflected in a lowered profit from your listings. Instead, try to adjust your Airbnb pricing depending on when your property is most in demand.
It’s wise to develop a system in which you can adjust your pricing as often as is beneficial for you. You’ll want to do lots of research and stay knowledgeable about various events and tourist attractions in your area. For example, if there’s a large conference or sports event taking place, you’ll be able to raise your prices to meet the demand. In fact, with some large events, you can charge up to five times your usual rate! On the flip side, if nothing’s going on in your area, you’ll want to lower your pricing.
In order to align your pricing on Airbnb with local events, you can do a simple Google search. Try searching for “events in (your city) (current year)” or “annual events in (your city)”. Staying active on social media can also help you learn about events that are coming up. Another place to look is your city’s tourism bureau, which can usually provide you with a list of events. Eventbrite is yet another helpful source. And as mentioned above, reviewing the local hotel rates frequently is a good idea of how to stay in-the-know.
Add Price Discounts
Additionally, when you start your Airbnb you occasionally get the option of adding a discount. Should this option pop up on the Airbnb platform, take it. When discounts are offered, it helps to boost your occupancy rate. This comes in handy when you are first starting out. Airbnb wants you to succeed so they often allow discounts to encourage guests to book your home. After you are more established and have received plenty of positive reviews, you’ll be able to return to regular pricing.
Another very useful strategy is to add discounts for guests who are staying for longer periods of time. A weekly or monthly long-term discount acts as the perfect incentive for travelers who need somewhere to stay for an extended period of time. By adding this discount, your accommodations will appear cheaper than others. This will draw more attention to your Airbnb property and is a commonly used strategy by most hosts.
Additional Fee Options
One of the most common additional fees used by Airbnb property owners is the “weekend fee.” Because more people travel on the weekends, pricing for Airbnb can go up to meet the higher demand. However, weekend fees should only be applied in areas that get more traffic on the weekends. If your area receives consistent travelers throughout the week, a weekend fee can actually push guests away from your listing.
Another area where you can maximize your income is that you may charge for additional guests. This feature is very unlike hotels. Airbnbs are rented by the person. This is an important distinction. As an Airbnb host, you’re able to specify how many guests can stay at your property before this fee kicks in. Additionally, you have the ability to set the specific amount for the additional guest fee. Of course, a benefit of this fee is that it’s not included in the initial pricing for Airbnb. This means that your property will appear cheaper to smaller parties looking to travel.
The Bottom Line for Airbnb Pricing
While pricing for Airbnb can seem complex, it’s really all about comparing your property to the competition. One way to begin is by searching Airbnb for similar properties in your area. It’s also essential to look into local hotel rates. Next, set your pricing for Airbnb based on the information you’ve gathered. As an alternative, you can use an Airbnb pricing calculator or the Airbnb Smart Pricing tool.
Next, you’ll want to adjust your price frequently according to events going on around you. As demand rises, you can raise your Airbnb pricing accordingly. During slower times of the year, decrease your pricing on Airbnb to draw in more guests. There will be a learning curve, but I promise you will get the hang of it!
Finally, when you’re first starting as an Airbnb host, it’s wise to offer a small discount. Once you’ve established yourself as a high-quality host, you’ll be able to charge normal rates. The last step is to consider adding fees such as weekend fees and additional guest fees to rake in a little extra cash.