5 Tips for finding the Best Pricing Strategy for Your Airbnb Rental
There are many aspects of a successful Airbnb listing, and in this article, we will take a look at pricing strategy. It’s one of the key factors which determines how competitive your property will be and how many bookings you will get. For this reason, if you want to maximize your profits, it’s necessary to approach pricing strategies very seriously. Maybe some of you have heard about Airbnb’s automatic algorithms to determine a recommended price and may wonder why bothering about the pricing strategy at all. My advice is to stay away from this algorithm because it tends to set the price well below the actual value of the rental.
Although coming with a right price on your own may be a tricky process, after getting familiar with 5 tips which I’m about to share, I’m sure you’ll be able to do a great job at it.
1. Calculate the lowest price, which can cover all your expenses. First things first, you need to calculate the break-even value of your property. This figure includes house cleaning, repairs, mortgage payments, fuel, gas, water bills, Airbnb fees, taxes etc. The figure which you will get will be your monthly expenses. Divide it by the number of days that you expect your property to be booked and you’ll get a break-even value per day. Everything that you earn on top of this sum will be your profit. In case your bills depend on the season, you can calculate different break-even values for each month.
2. Compare prices with similar rentals in your area. Just enter the name of the street where your apartment is located at (without any dates) and press search. Look through the other listing on your street which has more than 7-10 reviews and look at their calendar to see their yearly pricing. Better keep the gathered data in an Excel file in order not to forget anything. After you go through 5-7 properties, you can estimate what amount of money you want to charge for your property.
3. Research factors that influence changes in price during the year. Things you should consider are holidays, big events (concerts or festivals), high and low seasons. During high season or holiday season, you can easily increase the cost of your property, while keeping it lower during the low season.
4. Develop a comprehensive pricing strategy. When you go through points 1, 2 and 3, you will have enough information to develop a comprehensive pricing strategy for every month and even week. Things you should look at closely:
See that your price corresponds with demand (higher prices during the high season)
Make sure that you have a competitive price compared to other listings
To make more money, put your rates slightly below the prices of your competitors during the low season
See that your price reflects the special features and qualities of your listing
5. Price yourself a little lower if you have just started with Airbnb. If you’re new to Airbnb and have no reviews, then guests will be less likely to book your apartment. In this scenario, the only significant competitive advantage that you can use is price. To maximize your presence and give your listing a nice push during the first several months, it is recommended to set a lower price for your property before you get at least 3-5 positive reviews.
And the last but not least, don’t forget to have an eye on your pricing constantly. The market and demand level are changing all the time, and you need to constantly be aware of what’s going on to optimize your pricing strategy accordingly.
In case you need consultation in regards to the pricing strategy, or you want to get comprehensive and professional management for your Airbnb listings, you can book a call with UnicoHost. We will be happy to make your Airbnb business prosper!