The short answer of how to price your Airbnb effectively is to examine the competition and price yourself in the mid-range to start with and as you get more reviews, to gradually increase your price.
The one additional comment I would make is that there is a definite relationship between the quality of your photographs and the price you will achieve. Some people don’t read reviews, they just look at the photos (I know this is often the case with me) soon you need stunning photos to really make your property pop.
However, depending on where you are on your Airbnb journey and also how experienced you are, and of course, what type of property you have, your pricing strategy will change. So I’m going to cover each element in this article.
These are the keys points:
Let’s start with the basics:
How to price your Airbnb – The basics
1. (Especially to start with) don’t over-price or under-price your rental.
If you under-price people think that you have nothing to offer or your listing is generally of low quality (think iPhone versus $50 burner phone), or you’re just desperate for bookings, (and desperation never sells in any environment. Confidence sells.).
Equally don’t over-price. Every listing on Airbnb will have a market rate above which no one is going to pay, so do your research look at what competitors are charging, look at their reviews, and price your Airbnb accordingly.
2. There is a distinct link between the quality of photographs and the relationship between a booking and its price.
If you have poor quality photographs this will dramatically affect the click-through rate to your property. I cannot emphasize this enough.
A good photographer will be a worthy investment for a couple of hundred dollars. A good photographer will know how to make any listing look good. Evidence of this is all over Instagram where there are numerous tools available to make average look great. The same applies to photographs of your property.
Keep in mind that what you think looks great may not be what other people think looks great, so once you have your favorite 40 photographs, show these to a group of unbiased people and get their opinion. Majority rules.
Also in reference to photographs think carefully about the fact that your featured photograph must be the best of the best and show as many features of your property as possible.
3. Learn how to set your Airbnb price with Occupancy based pricing
Occupancy-based pricing simply means you charge a higher price the more people that stay with you (in one reservation).
With short-term rentals learning how to set your Airbnb price with this method is a major area where you can make money.
Why? The answer is simple: often people will book an apartment or other Airbnb rather than a hotel room because the Airbnb can fit six people this is cheaper than 3 double hotel rooms.
With this in mind, your occupancy-based pricing should be about two-thirds to three-quarters of what the equivalent hotel price would be. This way your guests will still be saving money over a hotel room yet you’re making money based on the Occupancy based pricing uplift.
Occupancy-based pricing is particularly important in the tourist markets, where you will have families of 4 to 6 people staying. Effectively it’s an opportunity to double or even triple your nightly rate.
All the major websites including Airbnb, Booking.com, and the Expedia group support occupancy-based pricing. However, you might also benefit from using a channel manager to help with this aspect of your lettings.
One caveat though, is you don’t want to make too many rooms or birds available (front only using the sofa beds of futons) as this may attract groups who want to have a party.
4. To price an Airbnb effectively-understand the nuances of each platform.
Although most platforms are broadly similar (they make money, you make money), each one has its own nuances:
Have you ever tried to get your head around “Expedia Partner Central” (Expedia Group’s backend) for example?! This is actually one area where Airbnb does win on how to price your Airbnb rental as backend (the hosting side) is much easier to navigate and simpler.
However, my main point is every platform is different, and it is worth getting your head around each one to really understand how you could optimize your pricing strategy to gain the most business. (Note Airbnb has some quite useful sections on its own site about how to set your Airbnb price).
Let me give you one example of a unique feature on one of the platforms:
On Booking.com you can set a “mobile rate” which gives guests a modest discount for booking on a mobile device. There are clearly pros and cons of this, and I don’t intend to debate these here, but it’s worth being aware that whilst Booking.com has this feature Airbnb does not, so take the time to understand each platform’s features and what they can do for you.
5. Price your Airbnb for the right season.
It doesn’t matter what type of listing you have (business, leisure, or anything else) the fact remains that prices change throughout the year.
The most obvious example of this is the school holidays when prices jump dramatically for similar services (airfares, hotel Rooms and holidays, etc).
You need to be ahead of the curve on this, anticipate (long in advance) when the holidays will be, and price your Airbnb accordingly. Many people book leisure accommodation months or even years in advance. If you haven’t adjusted your pricing to reflect the Easter holidays or the summer holidays etc, then you may be giving away nights at a cheaper price than you otherwise my gain.
Airbnb pricing for beginners.
1. How to price your Airbnb = Good Reviews
If you’re just starting off on Airbnb, all of the previous section applies, however in addition to great photographs, you do need good reviews. The reason for this is that even if people don’t read the reviews, they are likely to see an overall review score, but most importantly the positivity (or otherwise) of your reviews will affect your ranking on the website.
Therefore, when you’re starting out, price your Airbnb attractively to win bookings. You need at least 20 great reviews before you can start tweaking your price upwards. On my properties, I have 500+ reviews on multiple channels and cumulatively they’re all 4.5/5, which means I can command a higher price.
2. Make use of tools in the market.
I will discuss pricing tools later in this article, so please keep reading!
3. Airbnb Pricing Intelligence = The Competition
Look at the competition. How new is their listings? How many reviews do they have? How many nights can you book for? Remember that you don’t have to accept one-night bookings. Many properties will only rent for a minimum of five nights, for example (Much less hassle).
4. Price Fluctations
Look at how prices change month by month. This is just as important today whether you’re a new host or an experienced host. Then take action and adjust your prices.
Things to keep in mind are major events in your city, concerts, or similar. A great example of this was the massive hotel (and Airbnb) sell-out sparked by Harry and Meghan’s wedding.
5. Guest Feedback
Ask your guests for feedback. This is absolutely essential. I don’t mean reviews, I mean talk to them ask about their experience. What do they like? What did they like? What you do better? Simply asking the question might prompt a return booker.
Pricing your Airbnb-experienced hosts.
As an experienced host, you should be adept at pricing your listing to generate the most income possible. However, this isn’t always the case as many successful businesses plateau, the owners get lazy, and they miss out on easy money.
So, here are the main ways how to price your Airbnb rental as an experienced host.
1. Take advantage of your reviews.
This is what you’ve been working for. If you have 100 stellar reviews, make the most of them, as they will have a substantial impact on your bookings’ regularity, and price (as long as you’ve continued to do the basics right).
2. Let a Channel Manager or other Tech do the heavy lifting
Use the technology of a channel manager (especially if you have more than one property or listing) to take the pain out of tweaking your prices. They will help to ensure pricing consistency across platforms (If you’re charging $150 on one site and $120 on another, both sites might penalize you!).
3. Adopt Dual-Layer Pricing
What do I mean?
Using the right tech, you can have the same property/listing advertised at two different prices (as long as these are the same across all sites as in point 2).
For example, there will be some people that will never book a listing for $100 a night (as they see it as too “cheap”), and will only book for $300+ a night. If you’re not advertising that price you will miss out on bookings. Similarly of course the reverse is true you have some people who will never spend more than $100 a night. If you have made use of my advice on occupancy-based pricing, you can still make money from this.
Pricing is simply a matter of different demographics, more oftern than not.
4. Update Your Listing to Increase Prices
Update your pictures and amenities, so your listing doesn’t look stale.
Any listing which is five years old, it’s bound to look a little behind the times, and at the very least it’s not benefiting from all of the knowledge and experience you’ve gained over those five years.
Refresh your listing fine-tune it based on what you’ve learned, and increase your prices accordingly.
5. If you’re obviously better, increase your rates!
If you know you have a substantially better property than the competitors, don’t be afraid to price accordingly, especially if you’ve got great reviews. People will book this. I know this from my own experience where I am lucky enough to have properties in an outstanding location.
Pricing your Airbnb for the Leisure market.
A key difference in the leisure market is that it is highly likely to be a seasonal market, where you make all of your money in the high season, and you try and break-even in the low season.
It doesn’t matter whether you have a cottage in Scotland, a villa in Miami, or a Premium Airbnb in Sydney, make the most of the high seasons and price accordingly.
This is also where we can take advantage of things like advertising on Facebook to give you a boost. Please see my post on this here:
10 Tips for Promoting your Airbnb Listing on Facebook (that actually work) and 10 ways to market your Airbnb.
Pricing on Airbnb for the business market.
1. An Evergreen Market
The business market is an evergreen market in that it only ever really dies in festivals or holidays like Christmas, and even then only for a few days. If your listing is predominantly targeting business customers, then pay great attention to the prices of hotels charge, as these are the properties you’re looking to beat.
2. Reach Out to Local Businesses Direct
Where are you have a business listing, it’s a good idea to reach out to local businesses, who are likely to use your property. The cost of doing this will soon be recouped five 815 to 20% are you save on OTA fees.
3. Be on ALL of the booking Channels
It’s essential to have as a wider reach is possible, and especially on the channels popular with business bookers. Expedia has dozens and dozens of affiliate networks. Very often people get confused when they book on hotels.com and I talked to Expedia. They don’t realise to the same company. So reach out to as many OTAs (Online Travel Agencies) as possible, and once again you will do this most easily with a Channel Manager.
Pricing your Airbnb for the low season.
The low season does not miss (necessarily) have to equal the “lower-price” season.
Be aware of the many other sources of business than websites.
If you have, for example, a TV production centre, or a local hospital or any other major attraction that is likely to retain guests for months rather than days or weeks, engage with them and advertise through referral, word-of-mouth, or even consider a commercial refferal arrangement.
The vast majority of my clients these days are businesses looking to house executives for 3 to 6 months. Take advantage of this. This might not be so prevalent in the summer, but ideally you have a listing that will attract tourists for the summer months to so you’re not losing out.
I have tried to make this article as comprehensive and helpful as possible. I hope you like it, but I may have missed something, or you may have a great idea about how to price your Airbnb rental. Please let me know in the comments below. I read and respond to every one of them!
See also this advice.