How do I know what to charge and when? Determining if the price is right can be tricky especially since prices have to fluctuate from time to time. Not charging too high or too low is the goal and yet there are times when a price should be relatively high or low. There’s a thin dollar bill between overpriced and underpriced.
Stop Getting High
If you are a new Airbnb host or have a new property, don’t have high rates. When you haven’t been “tried out” a lot and aren’t well known on Airbnb, people aren’t going to be as comfortable staying at your property, much less paying premium for it. Airbnb guests are more likely to go with a property that has a lot of reviews because it helps any hesitation they may have. So begin with charging a low price, compared to other properties in the market, to draw them in and start collecting bookings and reviews. Be sure to ask them for their feedback and to leave a review so they can start piling up and you can start making necessary improvements.
Stop Being Low . . .
Once your property gains integrity, you should start raising your prices. Now that you have lots of reviews and bookings, your SEO has increased (site ranking) which again, puts travelers at ease. However, if you start getting completely booked for the next 3 months, it may feel like prosperity but doesn’t necessarily mean you’re making the profit you should be. This means you are charging too low, so raise the prices until you see a difference in booking. Start out with increasing 5-10% and observe. You should see a decrease in occupancy, if you don’t, then you are still charging too low and not making as much of a profit. You should be booked a few weeks out but only half booked a month or two out.
Related: Rental Income from Airbnb
The Weekend – Can’t Feel My Profit
While you shouldn’t price like a hotel, you should use the similar strategy, time-based pricing – charging more during the weekends and high season. When there is a high demand, charge more because of the limited options. When there is a low demand, charge less because there will be plenty of options for tourists. If you’re able to benefit from these prices, go for it, but make it worthwhile for your guests and their money. One way to see if you’re charging enough but still having a competitive price is comparing your prices to nearby hotels and properties. When special events take place in your area, visitors will book well in advance. Such bookings can go from 2-5x the normal rate, so take advantage.
Airbnb offers information about pricing and how to set up custom, seasonal and weekend pricing. There is also Everbooked, which automatically sets your prices for you based on events, seasonality and competition. Again, you can compare your prices to local hotels and Airbnb properties. Always take in account the property’s amenities and features, rates for similar properties and travel trends. Finally, you can always use Mashvisor predictive analytics to help you know what your earning should be to cover your costs and gain a return.
Related: The Use of Predictive Analytics in Real Estate Investing
What pricing strategies do you use? What have your experiences been like during the weekends and high seasons? When do you have the highest rates?