As an Airbnb host we know you have a lot of balls to juggle – one or more rental properties to look after and promote, customers to please, and then there’s the admin (such as staying on top of the bookings). But it’s essential that you find some time to address your pricing strategy – are you charging the right amount for your rental?
How Does Airbnb Pricing Work?
The aim of the game is to make money after all, you’re not renting out properties for the fun of it, are you? In order to maximize profit, you need to understand how Airbnb pricing works. First off, the host creates a listing for the property. Airbnb then suggests the price you should charge guests. To do this they assess the cost of living in the local area and explore what your property has to offer. Airbnb also evaluate you as a host, are you experienced or a newbie launching your very first Airbnb venture? These metrics allow Airbnb to suggest a base price, and the host can then tweak this to suit.
Pricing Strategy – What You Need to Consider
There are a few things you need to think about when working out your pricing strategy, let’s take a look:
- Know Your Market: Chances are you’re not the only one listing a property in the area! Find out about what else is on offer and make sure you are offering potential guests an attractive deal.
- Know Your Guests: Consider location, size and what features you offer, and then make sure you target your market. It’s a good idea to explore Airbnb statistics to gain an insight into who is renting, e.g. age of renters, how long people are likely to stay etc.
- Know Your Property: Does your pad have something special to offer? Perhaps you have installed a swimming pool or built a cellar bar complete with a jukebox! Make sure you market these elements as some guests will pay that little bit extra for bonus features.
- Know Your Location: Explore the area around your property, check out local places of interest and find out what’s going on in the coming months. If you are close to an exhibition centre, stadium etc there may be major events that could attract custom (you could hike up the price to take advantage of that).
- Know Your Costs: Get to grips with expected overheads (factor in heating, light, water etc) and make sure you have that covered in your price. You should also factor in cleaning costs.
Setting Your Pricing Strategy
So, you’ve got your base price from Airbnb and you have considered the key points above, now you need to get to grips with your pricing strategy. Let us help you with that:
Cost & Profit: Averse to taking risks? Paying attention to cost and profit will provide you with peace of mind that your costs are covered (so you can afford to pay your mortgage and bills and reimburse the cleaner)! Consider seasonal costs too – your guests might want to run the air conditioning throughout summer and the heating throughout winter so make provision for this.
When it comes to cleaning you can either incorporate this into the fee or add it on as an “additional cost” (it’s fairly standard to add a cleaning fee, so guests shouldn’t be put off by seeing this on your listing). Consider how much of your own time you will be investing in your Airbnb properties (time is money after all), and do consider adding an Airbnb security deposit (to guard against damage to your property).
Comparables: Check out the local market to see what your competitors are offering.
How much are they charging per night and what do guests get for their hard-earned money? You can tinker with your pricing strategy to make sure you are offering a competitive price.
It’s good practice to offer deals e.g. reduced rates for stays of over two weeks etc. You need to make your pad a more attractive proposition than others in the area.
The Price is Right!
It’s really worth taking the time and effort to set an effective pricing strategy. Take advantage of the expertise of Airbnb and use the suggested base price as your starting point. Then take into account the elements we have listed above as a means to tweak your pricing strategy to make it work for you. Here’s to a successful Airbnb venture and healthy profits.