Ah, economics is a subject that no one likes to study. Although it is not a favorite subject, hosts must chat about Airbnb economics. Simply put, setting the proper price for your Airbnb listing is essential to transforming this sharing economy into a lucrative industry. As a result, you must approach this challenge carefully.
Fortunately, two major channels flow into smart pricing models for your Airbnb listing, which may overlap. Cost and profit are the first, and comparables are the second. However, let us first look at logistics before moving on to strategy.
How Does the Pricing Strategy of Airbnb Apply to Airbnb?
Airbnb proposes basic pricing when you initially create your listing that best suits the property you have so far specified. This pricing recommendation generator combines a few details about your home with a dash of neighborhood rental market trends. You may even experiment with the ratios.
Airbnb suggests going below the recommended rate for rookie hosts without a lot of profile fluff to start getting regular reservations. A pricing recommendation, however, should never be taken at face value. No of their level of expertise, all Airbnb hosts should invest more time in research and compare their pricing to those of similar listings (*this is a little preview for what is to come). With all the search parameters and subcategories that can be used to filter the results in your city, this is a rather simple task.
After you set the first price for your listing and press “publish,” Airbnb gives you the option to return to your calendar and modify the price according to a few criteria.
A few really specific, extensive, and helpful elements. Consider this functionality as the frosting on your pricing strategy. Along with the property type you choose, it also considers the average guest’s preferences for facilities, payment thresholds, and travel distances. Oh, I nearly forgot: depending on demand, its pricing proposals are updated daily. How delightful.
Okay, on to the big event—the price plan. Although being familiar with Airbnb’s website features is vital, it does not always mean you will make money. I am here to guide you through the process of strategizing.
Plan A: Estimate the cost and profit of using Airbnb
This pricing plan for Airbnb is all about being cautious; by adhering to these recommendations, you can be sure to cover costs and maximize profit. We are talking now…
Pay for your costs.
Being egotistical in this situation is the only option. If you are a host with a mortgage or rent that you need to pay each month, you need to keep up. In these circumstances, making a profit on your Airbnb rental can keep you afloat.
Of course, you will want to pay more than the absolute least to have some spare cash, but the key is to ensure that your expenses are remembered.
Bills should be included in your Airbnb price.
My next point is billed (…, bills, bills). Take advantage of the chance to add in the price of utilities, taxes, or cleanings in advance. It would be unfortunate to lose money on a reservation because the air conditioning was expensive during a hot month.
As long as you make it clear upfront or include it in your listing’s total price, charging your visitors these fees is standard for Airbnb host behavior. This is made simpler by offering you the option to increase the cleaning charge displayed on Airbnb. By taking care of every other part of your listing moving forward, Lodgable makes this process simpler. It is typical to charge a cleaning fee to your visitors.
Take into consideration the time spent running your Airbnb
Do you take the time to prepare your Airbnb for the next visitor? How long did it take you to update your listing calendar? Depending on previous experiences, you may inform visitors about late check-in fines or other consequences. What matters most in this situation is how much time you devote to ensuring everything is going well. You devoted the time you might have spent working on another job or other initiatives to improving the quality of your visitors’ stays. Given that time is money and you do not want to let yourself run out, this opens the door for a price increase.
However, if it seems inappropriate, you are not required to charge your visitors more. You may save your visitors from paying the additional price increase while we take the time to ensure everything works well. Oh, and what is best? You will not even be able to tell the difference since we just take 3% of the booking price.
To secure your short-term rental properties, charge security deposits.
You have Airbnb on your side. Because of this, they permit hosts to request a security deposit as insurance against any issues that could arise during a reservation. The fee must fall between $100 and $5,000, as per Airbnb’s rules. And by the unofficial Airbnb rules, a decent starting point is to charge what it would cost to stay at the property in issue for one night. After checking out, you have up to 48 hours to file a claim.
Plan B: Comparing your pricing to that of comparable Airbnb listings
Okay, so your listing price adequately accounts for your expenses. But what if the outcome is much better than similar listings? Or much less than inferior Airbnb rentals? I am sure you should have planned for your plunge into price strategy to result in you drowning in competition. Here’s how to navigate the competitive Airbnb seas while keeping your head above water.
Recognize the Airbnb market.
I said (and I quote) “all the search details and subcategories that will help you narrow down the results in your city” back when you were reading the first 10% of this piece. The memories, ah.
This is done to encourage hosts like you to be aware of your local market, including comparable listings and their nightly rates. By experimenting with the smart pricing tool (and how to compete), you can better understand where those costs originate from. Remember to take into account your particular lodgings, facilities, location generally, travel patterns, and demand. Then put on your battle gear because you are prepared to compete with your Airbnb rivals.
Make pricing packages for Airbnb.
To differentiate your listing from the competition, there are still a few more elements that you could choose to handle on your own. One option is to create weekly or monthly bundles and adjust your listing’s going pricing to attract longer rentals. Any reservation for 7–27 nights will be charged a weekly rate, while reservations for 28 nights or more will be charged a monthly rate. Having an open-door policy for special offer discussions that are accessible on a guest-by-guest basis is another thing you should think about doing.
Do all you can to make yourself stand out.
The last check
As it turns out, discussing money may be entertaining if the conversation centers on ways to increase your bank account balance. You now have a clear understanding of the terrain and two cultivation methods. To keep track of changes in trends and the like, make sure you often check back with Airbnb’s smart pricing tool. The remainder of your account will be managed from here, so check back with us.
