A great Airbnb pricing strategy is a key to succeeding in business. Before a prospect books your Airbnb, one of the biggest factors they consider is the price.
With an Airbnb business, you have to ensure your price appeals to customers without devaluing your investment properties. So, it is essential to pick the right price point to guarantee success!
Airbnb pricing influences the traction your business receives. It affects your reviews and overall customer experience. But before you set your rate, here are a few things to consider when it comes to pricing your business:
What To Consider When Pricing An Airbnb
An Airbnb pricing strategy requires more than just picking an attractive rate. While smart pricing tools specifically cater to these, an Airbnb host still has to consider other elements involved. These factors are as follows:
Your property is the foundation of your business, so it plays a huge role in Airbnb pricing. Airbnb is open to several kinds of property listings, so you have to be wary of ensuring your price aligns with the type of property you own.
Say you are offering a shared room or apartment. A full-rate strategy is helpful for stable profit. A maximum night rate strategy is best for luxurious properties or experiences that encourage prospects to pay more.
Following property type, you have to consider location. Standard pricing for properties may vary depending on the place and demand in the area.
For example, apartments appeal during the summer because more people favor staycations or look for vacation rental businesses in different regions.
In some cases, location affects prices because of the uniqueness. If the property is on a remote island, people are likely to stay longer, so maximum night rates work best to cater to these.
When coming up with a pricing strategy, you should remember that your customer could be your competitor’s customer next time.
Guests usually compare properties before and after booking. If you want them to lean towards choosing your Airbnb, give them an offer that’s suitable and reasonable from a customer’s perspective.
Look out for what pricing strategies nearby competitors use and adjust to them. At the same time, you should offer enough to line up with your property’s value.
When guests pay a high price for your property, they expect you to offer more. Let’s say you only have a bed and bath. Prospects won’t be willing to pay for the property if it’s the same price as a larger room with a breakfast buffet.
In choosing your pricing strategy, consider what you offer to your audience. Will there be free meals or a buffet table? Do they have unlimited access to a pool? Extra services influence the length of their stay and help you determine which strategy is best.
Lastly, your pricing strategy directly affects your target audience. If you want to market your Airbnb to backpackers, a maximum night rate strategy may lower your profit because of low bookings.
However, if you apply this while targeting family vacations instead, the business will likely be stable. If your audience has lower budgets or prefers shorter stays, a maximum fill rate allows you to maintain engagement and income.
A Step-by-step Guide On Getting Started
Once you clear up the things to consider, here is a guide on how to start framing your Airbnb pricing strategy:
1. Start with market research!
Before anything else, do some research on similar Airbnb properties in your selected area. Look up which dates are usually booked and at what price points. Doing so gives you an idea of how competitors adjust seasonal and regular pricing.
2. Consider your options.
Break your list down to the most suitable pricing strategy for your business, consider each factor affecting the price. Note that it can vary depending on the season or target audience.
3. Ask for honest feedback.
As an Airbnb business, reviews are critical in boosting your listing. Positive reviews mean your listing appears higher in search results.
Newer listings can gather an audience by offering attractive deals to kickstart until they have adequate feedback to back them up during peak season.
4. Decide a price.
Pricing your Airbnb may be different depending on the season. The most money comes in during peak seasons, depending on the market and destination.
Remember to be careful in setting your rates! Offer your property for a good deal enough to maintain profitability while attracting guests.
When gauging a nightly price, remember that it should include more than just the cost to stay. It should be enough to cover expenses such as maintenance, utilities, tax, especially your monthly mortgage.
Top Airbnb Pricing Techniques
There are several strategies for pricing an Airbnb vacation rental business. Each of them is effective when applied during the appropriate times. Here are a few recommendations:
Maximum Fill Rate Strategy
This strategy aims to ensure maximum occupancy by providing the best experience in the location. And so, you should offer more value than surrounding competitors. Nightly rates will be low, but this strategy can result in a stable income.
Maximum Nightly Rate Strategy
The maximum nightly rate strategy is best for a supreme Airbnb located in a prime area. Charging the maximum rate per night is ideal, on top of other fees for better profit from every booking.
Dynamic Nightly Rate Strategy
Unlike the maximum nightly rate, the dynamic nightly rate strategy requires you to adjust your nightly rates regularly to compete with others. The primary goal is to gather as many bookings as you can get.
Long-Term Rental Agreement
Long-term vacation rental usually follows a monthly rate. Less effort goes towards listing management with this strategy, and you may be making less per night. However, it guarantees continuous and stable income generation.
Balanced Pricing Strategy Airbnb
This Airbnb pricing strategy refers to the combination of several pricing strategies to maximize your business. It leans towards a dynamic approach wherein your pricing strategy changes with the season, demand, and other major factors.
How To Manage Airbnb Pricing Strategy
You can manage your Airbnb pricing strategy via three primary methods. These are listed below:
You are responsible for researching, deciding, and tracking activity involving a chosen pricing strategy. It demands more time and effort since you are working on it yourself.
Although it may not be practical for an Airbnb host with packed schedules, it allows you to put more care and thought into planning your strategies.
Airbnb Smart Pricing Tool
Airbnb offers a service where they gather data for you and follow you up with price suggestions called Airbnb smart pricing. However, you will have to make manual comparisons to determine which price gives you the most benefits, maximum revenue, and most value.
Using automation tools is a popular choice for many vacation rental operators. The software works similar to smart pricing by generating accurate pricing suggestions based on your vacation rental business.
Other software, such as Myror, may feature advanced and custom options. These include additional costs like a substantial cleaning fee, price per guest, and security deposit in the calculations.
Kickstart Your Airbnb Rental Business
An Airbnb can bring you high profits, but it can also result in high losses. Finding the best Airbnb pricing strategy for your business saves you from extensive risk, especially when your listing is fairly new.
There is a lot to consider when picking an Airbnb pricing strategy, but the return will surely be worth it. Looking into different mediums to manage your pricing strategy helps you keep a consistent flow.
Where To Go From Here?
Understanding your business is key to knowing the best way to operate your Airbnb listing. If you’re a property owner with little experience in pricing management, a few tools or professional assistance will be helpful.
A lot of thought goes into your renting strategy because it influences the success rate of your business. So, take your time to evaluate your property, expenses, target market, and all other factors surrounding it before picking your strategy route.
Myror offers an advanced smart pricing feature to give you a boost in formulating your Airbnb pricing strategy.
Now, you have the option to set your pricing per guest (and for each guest after your chosen cap.) The feature includes extra costs when setting a price for each guest. On top of that, it also adds the cleaning fee and security deposit when calculating pricing.
All these features make finding the best Airbnb pricing strategy much quicker. So if you’re looking for ease of access, using pricing tools is the way to go!