7 Strategies to Maximize Your Airbnb Pricing Strategy

As an Airbnb host, you may own the most beautiful property on the market, but, at the end of the day, this means nothing without an effective Airbnb pricing strategy. When setting a nightly rate, you have to consider several factors. 

When you lay out your pricing strategy properly, you ensure you take home sufficient profits on top of covering your Airbnb’s overheads. But how do you set up an effective Airbnb pricing strategy? 

In this post, we’ll take you through everything you need to know about formulating a pricing strategy to turn your Airbnb into a lucrative business.

Why Pricing Strategy Matters

Running a business is ultimately all about numbers. If they don’t add up, the likelihood of you establishing something sustainable is near impossible. That’s why ensuring you have a stable pricing strategy for your Airbnb is essential. 

Having a carefully considered pricing strategy will ensure that you get a good return on investment on the initial capital you put into the property to make it into the special place you always wanted. It will also guarantee that you cover all the overheads like maintenance and cleaning and will also ensure that you have enough in the bank to cover any potential damage, which is highly likely in the hospitality industry. 

However, your pricing strategy is about more than ensuring you cover your expenses and walk away with a decent profit. You also need to ensure that you offer your guests a price at a competitive rate for what they get. What your guests pay does set an expectation of what kinds of experience they can look forward to. 

If you overprice your place, your guests will leave feeling as though they have been ripped off or that the facilities did not match what they paid, meaning it’s less likely they will book again. Having the right price set will also help to ensure that your occupancy rates are optimal, which will guarantee a consistent stream of income.

Top Strategies for Effective Airbnb Pricing

In order to ensure you get the most out of your Airbnb business, there are a few factors you need to consider when setting your accommodation rates. Below are the tips and tricks you can follow to ensure that you develop a pricing strategy that gives you the most out of your Airbnb business and ensures that you have consistent occupancy. These are the things you need to consider to ensure your pricing strategy does the most for you. 

Understanding Your Base Price

The base price is the number that requires some work to get to. Essentially, you must calculate all the costs of running your Airbnb and what you have to charge to make back what you spent during the initial set-up. This figure will give you your nightly costs, or rather, the minimum amount you have to charge to cover all your expenses before you can take home a profit. 

You should also consider your overheads, like the amount you pay to Airbnb to list your properties on the platform, the cost to clean the property, and the cost of any additional marketing or advertising you do to promote your Airbnb. These factors will give you the base or minimum price you have to charge for your Airbnb to cover your costs. 

Dynamic Pricing

A top tip to ensure that you get the most out of your Airbnb is to ensure that you set your prices in line with what is known as dynamic pricing. This type of pricing is how most Airbnbs ensure that they make the most money when properties in certain areas are in high demand at a particular time. For example, if you have a property close to a top skiing spot, it’s likely that yours and properties similar to yours will be more in demand during the winter months or during a time when there is ample snowfall. 

During peak season, dynamic pricing means you will push your prices up to maximize profits. You need to ensure that you don’t overprice during this time, as you still need to remain competitive with other properties to get bookings. Remember that guests will factor in value for money when they rate their overall satisfaction with the experience. 

Utilizing Airbnb’s Smart Pricing

The smart pricing tool on Airbnb is a great way to ensure that your nightly prices are adjusted according to the optimal rate for properties of your type. The tool makes use of an algorithm that analyzes the state of the market for properties in your area that offer similar facilities to the ones you do. 

It’s also a tool that offers hosts a lot of flexibility, given the fact that you can set the minimum nightly amount you charge guests so that you remain in control of your rates at all times. For additional flexibility, you can also manually adjust pricing on a daily basis to ensure they remain at a rate you’re happy with. 

Long-Term Stay Discounts

Another great way to optimize your pricing strategy is to offer your guests discounts if they book your property for extended periods. If you think about it, the longer someone stays, the less frequently you will have to clean the property. In other words, you will only have to clean the property about once a week when someone stays for two weeks or more, as opposed to after every checkout for shorter-term stays. This is one of the costs you can deduct to offer discounts for those who want to stay in your Airbnb for longer. 

Special Offers and Promotions

Think about those special occasions and holidays that people tend to go away. Long weekends, festive seasons, and other special occasions are the perfect opportunity for you to offer your guests discounted prices to give your property that extra competitive edge. You can even offer guests discounts for personal occasions like birthdays or anniversaries. If you choose to offer guests special rates for holidays, then you will need to make a note of these dates in your booking calendar. 

Similarly, you will also need to ensure that you verify the information people give you if they want to take advantage of the discounts you offer for their personal celebrations. Offering promotions and special offers can make your accommodations stand out and add another selling point. 

Regular Price Reviews

A common mistake that new Airbnb hosts make is that they set their rates and then leave them as is. To make the most you can out of your Airbnb, you need to be dynamic in how you adjust and review your pricing. Once you have become more established, you can review the pricing to ensure that you are not undercutting yourself and what it is you offer. If you make any changes to the property, like upgrades or additions to your facilities, you will also need to perform a pricing review to ensure you cover costs and align your pricing with the rest of the market. 

Offer deals when you first start out

When initially listing your property on Airbnb, you should ensure that you don’t charge too much until you have established a good reputation. It’s a good idea to undercut the market slightly when you first advertise your property to attract guests with a good price. This will ensure you get your feet through the door, which will ultimately help you build a positive reputation and encourage others to leave good reviews. 

Mistakes to Avoid in Your Airbnb Pricing Strategy

There are several common mistakes that many Airbnb hosts make when it comes to their pricing strategy. These are mainly missing promotional opportunities for your Airbnb and overpricing or underpricing your property. Let’s delve further into these. 

Underpricing

Underpricing is simply where you sell yourself short based on what your Airbnb has to offer. It’s a mistake that can result in you only breaking even or in some severe circumstances, may lead to making a loss. To avoid underpricing, you need to make sure that you carefully calculate your costs to ensure the listing price covers these, and then think about the amount you want to make on top of that. You do, however, need to make sure that you don’t charge too much to make a bigger profit, as this may lead to overpricing. 

Overpricing

Overpricing is simply charging too much for your Airbnb in comparison to what others charge for similar properties. The best way to avoid this is to ensure you conduct thorough research on the Airbnb market landscape and price your property competitively. This will ensure you stay on track with pricing comparisons with properties in your area, look at how they charge for the facilities they offer, and allow you to adjust your pricing accordingly. 

Ignoring Local Events and Holidays

The more established Airbnbs will offer promotions and special offers for holiday seasons and special events. If you ignore peak times, then this can affect your profits negatively. It’s therefore vital that you pay attention to local events and holidays. 

Tools to Help You Optimize Your Pricing

The good news is that there are various kinds of software that can help you to develop a pricing strategy that will ensure you get the most out of your Airbnb. Take the Hospiria platform, for example. This platform allows you to sync your listings across platforms and can help you make adjustments for all your listings in one place. 

Airbnb also offers a pricing tool which takes market factors into consideration and can help you adjust your prices to maximize occupancy and profitability at any given time.