As Airbnb Superhosts, we understand that one of the most critical decisions we make is pricing our listings. Just keep in mind though that the key to success in this business is not just about finding a profitable price point, but about shifting our mindset to focus on long-term sustainability.
Domi & Diego
When it comes to shaping your Airbnb pricing strategy, nothing holds as much weight as shifting your mindset to long-term thinking. Navigating the vacation rental market requires more than just a keen eye for immediate profit; it demands a comprehensive approach that values sustainability and steady growth over instant gains. This mindset shift is the key to unlocking the full potential of your Airbnb business, setting the foundation for consistent income and a thriving reputation. As you dive into this blog post, which delves into the key factors to consider when setting up your pricing strategy, remember that your primary focus should always be on the long-term trajectory of your Airbnb business. Everything, from analyzing your competition and seasonal fluctuations, to adjusting for special events and tailoring your unique selling proposition, should be viewed through this long-term lens. By doing so, you'll be positioning your Airbnb venture for sustainable success in the dynamic and ever-evolving vacation rental market.
In a long-term strategy, occupancy rate serves as one of the main barometers of success in the Airbnb arena.
A high, sustainable occupancy rate not only ensures a consistent income stream, but also indicates your property's appeal and competitiveness. Achieving this involves a blend of strategic pricing, enticing amenities, and effective marketing. With a long-term perspective, you can optimize these factors, fostering regular bookings and building a strong reputation. Remember, every booking is a chance to enhance relationships, garner positive reviews, and strengthen your standing in the Airbnb market.
Location is perhaps the most significant factor to consider when pricing your Airbnb. Properties located in highly desirable areas or near popular tourist attractions will generally command higher prices than those in less desirable areas.
For instance, our listing in Washington, DC is one mile from the White House and is usually more expensive than properties located in the suburbs - even when compared to much larger and newer homes. On the other hand, one of our properties Playa del Carmen, Mexico is located in the suburbs and a 10 minute drive to the nearest beach so we cannot demand beachfront prices.
Overall, it is important to research the prices of similar listings in your area to determine the right price range for your Airbnb. We recommend zoning in your analysis to a two mile area at the most.
Tip: keep reading because there are several other factors than can compensate for location.
In our experience this is one of the factors that is at the top of our list to determine our pricing strategy. Positive reviews and high ratings can dramatically increase demand for your listing, allowing you to charge a higher price. Conversely, negative reviews and low ratings can lead to a decrease in demand and a lower price.
So be patient if you have a new listing and do not be discouraged if you need to price your property 10% or even 20% lower than the competition. Keep in mind that over 50% of guests will not book your property if you have few reviews and attracting them with price is a valid part of your strategy.
In the beginning, you should focus on prioritizing a great guest experience and encourage guests to leave positive reviews and ratings above all else. Great reviews will set you up for success in the long run and you will raise your prices.
Profitability will suffer at first but as soon as you start getting that great third or fourth 5-star review you can start gradually increasing your prices, always monitoring occupancy rates. In our experience, once a property gets past 30+ reviews with a 5-star rating overall you can start charging 20% or even 30% more than similar properties and occupancy will not suffer.
Great photos and good copywriting are essential for your Airbnb listing because they help you to create an accurate and attractive representation of your space. Keep in mind that when potential guests are browsing for properties, they want to see clear, bright, and well-staged photos that accurately depict what they can expect when they arrive. High-quality photos can give guests a good impression of the space, and this can lead to more bookings.
Good copywriting can also help to create a good impression of your property. With the right wording, you can highlight the unique features of your space and help to create an emotional connection with potential guests. This can help to set your property apart from the competition and make it more appealing to guests.
The quality of your photos and copywriting can have a significant impact on your pricing strategy, as they directly influence how guests perceive the value of your property.
If your listing looks professional, well-maintained, and cared for, guests may be more willing to pay a higher price for the experience. On the other hand, if your photos and copy are poorly done, guests may be less likely to book your property, and you may need to lower your prices to attract guests.
Seasonality is another crucial factor to consider when pricing your Airbnb. Depending on the time of year, demand for accommodation can fluctuate significantly. For example, properties located near beaches or ski resorts will likely command higher prices during the peak season than in the off-season. In contrast, properties in cities may see higher demand during the summer months when many tourists visit. Therefore, it is essential to consider the seasonality of your area when pricing your Airbnb.
The amenities and features offered in your Airbnb can also affect your pricing. Guests are often willing to pay more for properties that offer a variety of amenities, such as a pool, hot tub, gym, or fireplace. Similarly, a property with more features such as a view or a balcony may command a higher price. Therefore, it is important to highlight the unique features of your Airbnb to potential guests.
If you identify unique features that set you apart from the competition, do not just raise the price. The key is to showcase them and make them evident in your listing and photos.
This is a challenging one that lately has become more disliked among some guests, as they feel it is unfair when they compare it to hotels. However, short-term rental hosts still need to cover the cost of cleaning and maintenance to ensure that their Airbnb is clean and presentable for each guest. And, after all, Airbnbs do not have the economies of scale and flexibility that hotels have in regards to cleaning and maintenance staff.
One solution we have tried lately and successfully in our Washington, DC rental is to incorporate the cleaning fee into the nightly rate, in other words, offer a lower cleaning fee and charge a slightly higher nightly rate.
This way, guests are not surprised by an additional cleaning fee, and hosts can still cover their costs.
In the Riviera Maya, cleaning and maintenance costs are considerably lower than in DC so we have lowered them to cover cost and we are actually considering removing them altogether to attract more guests. The nightly rates are more than enough to offset the entire costs.
The cost of cleaning and maintenance will depend on the size of your property, the number of guests you can accommodate, and the services you offer. Therefore, it is essential to accurately calculate these costs to determine the right price for your Airbnb.
Tip: when calculating the real costs of "cleaning" for your property we advise you to consider all direct costs that you might inccur with each guest turnover, including: professional cleaner costs, laundry costs, all essentials and supplies you might offer (paper towel, toilet paper, soap, coffee), a portion of maintenance costs that you can associate with each turnover.
Knowing the real cost of each turnover does not mean that you will set your cleaning fees equal to your turnover costs but it is an essential element to consider when setting up your pricing strategy and remain profitable.
The booking window is the time between when a guest makes a reservation and when they check-in. The length of the booking window can impact the pricing of your Airbnb. For instance, guests who book further in advance may be willing to pay more than those who book at the last minute. Therefore, it is important to consider the length of the booking window when pricing your Airbnb.
If you are hosting extended stays as well, offering discounts is a strategy used by Airbnb hosts to attract more guests.
The discounts can range from 5% to 30% off the total price, and they can increase bookings and occupancy rates.
However, hosts should consider the costs associated with hosting an extended stay, such as additional cleaning and maintenance costs, to ensure that the stay is still profitable.
The guest profile can also impact the pricing of your Airbnb. For instance, business travelers may be willing to pay more for properties with additional amenities such as a work desk, while families may be more interested in properties that offer a child-friendly environment. Therefore, it is essential to consider the needs and preferences of your target audience when pricing your Airbnb.
Fees and taxes can also impact the pricing of your Airbnb. These are fees you do not have control over but they discourage some guests nonetheless. For instance, Airbnb charges a service fee on every booking, which can range from 5% to 15% of the total booking cost. Additionally, some cities and states impose occupancy taxes on short-term rentals.
Our advice is to consider your guest profile and your market overall. If you are in a price-sensitive market, guests will probably be affected by these fees so you might actually need to lower your prices to stay competitive and attract more bookings. On the other hand, guests in less price-sensitive markets will probably won’t care as much about.
Your prices should never be still but it might be overwhelming for hosts to manage the above factors without the proper tools. Just updating your prices weekly would be a time consuming exercise. Fortunately, there are tools that can greatly help you achieve this.
We know there are several great companies doing revenue management. Our experience is with both Beyond Pricing and PriceLabs for our three properties so we can only review them. After years of using Beyond Pricing we decided to switch to PriceLabs because it simply works better and is way less expensive (a story for another blog post). By using our exclusive link you get a $10 discount on your first invoice.
PriceLabs is a service that helps hosts set the optimal price for their listings. The service uses an algorithm to analyze various data points, such as local market conditions, booking trends, and seasonal patterns, to determine the best price for your listing.
One of the benefits of using PriceLabs is that it takes into account the factors that impact pricing, such as seasonality and competition, which can be challenging for hosts to track and analyze on their own. The service also considers your property's unique features and amenities to help determine the optimal price.
PriceLabs provides real-time updates to pricing, adjusting the price automatically overnight to reflect changes in demand and supply. This feature allows hosts to maximize their revenue by ensuring that their property is always priced competitively.
The best thing is that you are always in control. Overwriting prices and setting conditions such as minimum nights, among other features, is a breeze.
Another advantage of using PriceLabs is that it provides hosts with insights and data analytics. Hosts can access reports that show trends in bookings, revenue, and occupancy rates. These reports can help hosts make informed decisions about pricing and marketing strategies.
PriceLabs offers integration with various property management systems and channels, such as Airbnb, VRBO, and Booking.com. This integration allows hosts to automate their pricing strategy across multiple platforms, saving time and ensuring consistency in pricing.
In the trenches of short-term rental hosting, we stumbled upon our own gold mine of challenges. That’s how HelloBnB sprung to life—crafted from our mishaps, adventures, and a-ha moments. It's more than just a product; it's our passion project, steeped in insider know-how. We’re turning our oops into your perks, offering a tool that gets the guest experience just right.
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