When we took a poll of our experts to ask what the most common thing they are asked, the #1 answer, as you may have expected, was “How can I make more money from my rental properties?” And their #1 answer: Do a better job of pricing your properties.
It’s impossible to calculate the actual amount of money that hosts have left on the table by blindly setting uniform rates far into the future, but it is most definitely a staggeringly high amount. During peak weekends it is common for average rates to fluctuate between 2x-5x depending on your country. We have seen so many instances of entrepreneurial hosts who implement dynamic pricing to earn two times or three times more money than the exact same properties were earning using non-dynamic pricing techniques.
You are most likely leaving money on the table if you aren’t doing these three things:
- Tracking the most rented properties near yours that share characteristics with your property. Use a chart (sample below) to track the pricing of these properties to help give you a guideline when setting your own rates.
- Using online tools to dynamically set pricing. Understand your rates will likely vary drastically on a week-by-week basis depending on events happening in your area and quick changes in regional availability.
- Keep turn costs to a minimum by fairly charging back tenants with cleaning fees and clearly communicating “additional fees” when applicable.
When you look on the official Airbnb website, it lays out the platform that makes up the pricing ecosystem that exists within Airbnb:
The price you charge for your listing is completely up to you. To inform your decision about what price to set, you can search for comparable listings in your city or neighborhood to get an idea of market prices.
- Cleaning fee: You can either incorporate a cleaning fee into your nightly price or you can add a cleaning fee in your pricing settings.
- Other fees: To charge extra fees outside of your rates (like a late check-in fee, pet fee, or bike rental fee), you must first disclose these potential charges to guests prior to booking and then use the Resolution Center to securely request payment for additional fees. Airbnb is not responsible for the collection of payments on your behalf that are not incorporated into your pricing.
Once a reservation is booked at a certain price, it is obviously impossible to get a higher amount of money for that particular rental on that particular night. And that margin, sometime only $10 or $20, isn’t enough for an owner/manager of a single property to worry about. But if you own or manage properties with a high base rate there’s a good chance that you adopting dynamic pricing methods will drastically increase profits.
Here is a compilation of advice and tips from our experts when it comes to conducting pricing research and implementing pricing plans that lead to the maximum possible profits. Obviously each individual market has its own variables so we’ve tried to phrase our advice in a way that allows you to apply it locally.
Actively Track Your Competition
Create a list of about 5-10 properties on Airbnb that are comparable to yours; which means close by and similar statistics (size, amenities, upgrades, etc). Many experts find it’s easiest to track these other properties using a type of chart or grid. If you’re able to use a spreadsheet on Google or Excel it may be easier to track trends over time. If you make a list of competing properties on the left you can write in the different distinct “seasons” for your market. At the very least, you will want to establish what each competitor charges during peak season weekdays/weekends and off-season weekdays/weekends.
Use Research Tools Online To Collect Data
There are both free and paid options when it comes to gathering