When Scaling Your Airbnb Business One of the Most Important Techniques to Master is Pricing. Here are a Few Guidelines to Help You Figure Which Price is Right.
What is your Airbnb pricing strategy? This is the million dollar question and your response is directly reflected in your bottom line. Could you be making more? Are you barely breaking even? If so, STOP! With Airbnb being a Multi-Billion dollar business, you should be claiming your rightful piece of the pie. For your slice of success, here are the tools to help you price your Airbnb.
What’s Your Ballpark?
Before you freak out wondering if you’re charging too much or if people won’t pay your asking price- start with the basics. Calculate your monthly rent or mortgage (plus utilities) and divide that by 30 (days in a month) this will give you- at the very least, the number you do not want to go below when charging per night.
Obviously, this is a business that you want to profit from. So, let’s take a closer look at how to turn your ballpark number into some serious cash.
Evaluate Your Market Value
Assessing your Airbnb listings optimum price is all about comparison. Just like any business, you have to understand what guests or customers are willing to pay. To determine your value take a look at competing Airbnbs. Refine your search for the following:
- View geographical competition from neighborhood, city, even entire state.
- Compare Airbnb’s with the most similar size and shape (bedrooms/sq ft)
- Style (Apartment, home, duplex, penthouse)
- Amenities (Do you offer the same extras?)
For the highest accuracy when surveying your market value, try to collect as many similarities amongst Airbnb’s to compare yours to.
Keep in mind not all Airbnb’s will show in your search result due to being booked. To avoid this select your booking date to be within a few months range.
Refine your search to the highest rated and “best booked” competitor Airbnb’s. You want to be the best and market yourself accordingly, so compare your pricing with the “top sellers”.
Airbnb Pricing Tools
Along with surveying competitors, there are tons of financial nuances to be studied. Luckily, along with Hostly, there are great tools to invest in to help scale your business. When it comes to developing the right price Wheelhouse and Airdna make it their mission to study your market for you. If you’re not good with numbers, give these guys a try. These tools may not use analytics that suits your personal ideas and goals as a host. No size fits all, but the service can save you time. If not, onward to discover more ways to do it yourself!
Quick Fix Pricing
If you’re new to Airbnb or you need to fill bookings ASAP, undercutting the competition may be a quick fix. Price your place 25% below your estimated market value. Then slowly increase your rate as your listing starts to receive positive reviews. This is not a long-term plan, but helpful during off-season.
Airbnb’s Suggested Rate
When developing your Airbnb account and creating a competitive listing, Airbnb will provide a tool that gives you a suggested daily rate. For all intents and purposes- ignore this number. The algorithms aren’t ideal for profitability. I have seen a price suggestion at $129/night on a property that successfully books at a $199 daily rate.
Bait and Switch Technique
If a guest searches Airbnb without setting their dates (only using location) the price that will be shown is your base rate. You are able to set your base rate about 20% lower, making your initial impression that much more desirable. Once they click on your listing, read its description, and drool over your beautifully staged Airbnb- they are ready to book. Once dates are selected the base rate will increase to the daily rate. If they are still in love with the listing they will complete the booking.
I realize this isn’t an ideal tactic for everyone. However, it is an old school business move that is alive and well on Airbnb.
As it turns out, talking about finances can be quite fun when the discussion circles around to getting you more money in the bank. Now you have a good lay of the land with a few strategies on how to cultivate it.
Author: Amina Grace