When is the right time to lower your Airbnb nightly rate? How can you guarantee that your short term let is rented out all year round? It can be really tricky to get your Airbnb pricing strategy right and you’ll find that hosts have different approaches when it comes to maximising their earning potential. We have put together a quick guide that will help you nail your Airbnb pricing strategy.
Step 1 – Know your financial limits
A scenario: ‘Sarah’ borrowed a considerable amount of money from the bank to renovate the barn in her garden. She spared no expense when it came to styling it with gorgeous vintage furniture, installing the latest smart technology and adding special touches. Her goal? To turn the barn into a lucrative Airbnb business.
When the time came to set her nightly rate, Sarah based the price on what she needed to earn in order to pay back her loan. She was also very emotionally invested in the property, believing it was worth more than its market value. Needless to say, she ran into a whole lot of financial trouble and got into further debt due to being ill-advised about the best way to set up an Airbnb business.
Moral of the story: Always assess your financial situation before launching an Airbnb business. Understand how much you’ll be out of pocket for renovations, utility bills, property maintenance, unexpected repairs, and cleaning fees.
Step 2 – Understand the platform
As an Airbnb host it’s also important you educate yourself about the way the platform works and how you can get the most out of it.
This is how to set your basic nightly rate:
- Select your listing
- Click Pricing at the top of the page
- Next to Nightly price, click Edit
- Enter your nightly price and click Save
Remember that any changes you make will only apply to future reservations. You won’t affect any of your confirmed reservations by editing your basic nightly rate.
The good news is that if you are completely new to the holiday rental world and have no clue what price to list your property, Airbnb will suggest a base price for your listing. This price is calculated by taking into consideration your property details such as the number of rooms and whether it has outdoor features like a large garden or swimming pool. Airbnb will also take into account your location and similar properties in the area.
Step 3 – Treat Airbnb like a business
If you’re a host who expects their Airbnb to bring in great cash flow without having to work hard for your money, think again. The holiday letting market is constantly changing and hosts need to be diligent when it comes to monitoring developments and adjusting their pricing strategy accordingly.
Always keep track of your competition. How much are similar Airbnb rentals in your local area being listed for? Are they charging £50 less a night than you and if so, why?
Also think about the types of features or amenities you could add to your listing that would allow you to charge more. For example, if you have a rooftop terrace, could you add a hot tub (or a kiddie pool)? Could a play-set in your garden make the Airbnb more enticing for families?
Step 4 – Dynamic Airbnb pricing is the way to go
One of the biggest mistakes a new host will make is that they will set their nightly rate and walk away. If you’re keen to optimise your revenue, then you should adjust your nightly rates according to market demand. If you see that other rentals in your area are being booked out for a certain week due to a major event, increase your pricing. If you know that apartments are left empty over the winter in your neighbourhood, reduce your price in order to encourage bookings. You should also consider different rates for popular days of the week such as Friday and Saturday.
How to set weekend pricing:
- Select your listing
- Select Pricing
- Under Extra Charges and Currency, look for Weekend Pricing and enter your nightly rate.
Step 5 – Don’t forget the cleaning fee
The Airbnb cleaning fee is an additional charge that hosts can work into their pricing. The fee is set per stay (not per night), and will be listed separately on the final pricing breakdown.
Many hosts use the cleaning fee to offset the cost of cleaning services, laundry, or maintenance, but it can also be used to boost a host’s income. Test increased cleaning fees and monitor if it affects your bookings, but keep in mind what message you’re sending to guests: a low cleaning fee will likely encourage guests to clean up after themselves, while a higher rate might make them feel they don’t have to tidy up after they leave. Take a look at our Airbnb cleaning fee guidelines for more tips.
Step 6 – Optimise your revenue
Airbnb pricing strategies can vary depending on the type of listing that you are managing. A pricing strategy that’s effective for one host, will be less effective for another. Here are some basic strategies and reasons why they suit particular Airbnb properties:
Maximum nightly rate strategy
This strategy is ideal for a host who owns an Airbnb that is in a prime location and is of a very high standard in terms of interior design and furnishings. If you have a supreme apartment in an ideal location, you can charge the maximum rate per night as well as high fees. This will allow you to make a better profit from each individual booking.
Dynamic nightly rate strategy
You have to be prepared to be completely engaged with the Airbnb rental market for this strategy to work. This option involves you constantly changing your nightly rate so that it’s always more competitive than similar rentals in your area in order to get as many bookings as possible. It requires you to constantly monitor your competition and adjust your pricing accordingly. This is probably the hardest work of all the strategies but it can reap the biggest rewards when it comes to your bank balance.
If you’re a host who is planning on being away from your apartment for a considerable block of time, say 3-6 months, you could price it so that it attracts a more long-term renter. Obviously, you will earn less per night but you’ll have a regular, guaranteed income from the one continuous tenant.
Step 7 – Get the help of an Airbnb expert
GuestReady uses a range of innovative online tools to help Airbnb hosts remain competitive in the market. Our goal is to optimise the revenue of our Airbnb hosts to ensure that they are getting the most out of their investment property.
Why not check out our online property calculator to get an idea of what you could be charging on Airbnb for your rental.