How much you charge for your Airbnb property could make or break your short-term rental (STR) business. Whether you manage a single property or have hundreds as part of a portfolio, charging the right rates is crucial to getting consistent bookings.
The answer to how much you should charge for your Airbnb depends on a variety of factors specific to your rental property. The size of the property, the local market, amenities, the number of guests it accommodates, seasonality, and more. And it’s paramount the amount you charge covers the costs of owning the property while simultaneously maximizing your profits.
We’re going to help you determine how much you should charge for your Airbnb. In this article, we cover several key factors including market research and other means of optimizing your Airbnb property rates. By the end, you’ll know how much to charge for your Airbnb and how to get the best rates possible.
Calculating your nightly costs is a vital first step to charging the right amount for your Airbnb.
You can determine your minimum nightly rate with a simple formula, as shown below.
The total number is your average daily cost of maintaining your Airbnb. This will be the very least you should charge. Ensure you have this minimum amount covered. Then, you can think about pricing to maximize your STR income. Also, you’ll need to consider an amount that can help buffer against nights when your property is vacant.
Researching similar Airbnb properties in your area is an important step in determining the right rates for your property. Otherwise, you could end up undervaluing yourself, not making as much profit as possible, overcharging, and never getting consistent bookings.
Doing the market research is easy. You can use Airbnb’s main page to search for specific kinds of properties. Apply filters relevant to your property, and you’ll find those like yours. Remember to search for properties in your area most similar to yours. Search for properties with the same number of bedrooms & facilities, and amenities. By analyzing the properties, you can approximate your average nightly rates.
For the most accurate picture, look at the prices for these properties in the future. Select dates two to three months in advance. Also, remember to take seasonality into account. Depending on your location, prices during the summer months may be higher and lower in winter, or vice versa.
For new listings, we recommend a slightly lower price until you get your first positive reviews. Once you get some 5-star reviews and build trust with your future guests, your property will climb the rankings, and that’s when you can increase your nightly rates.
With your market research concluded, you should have a solid idea for a nightly base rate. However, this rate shouldn’t be applied for every day of the year.
Airbnb prices can fluctuate wildly throughout the year. In most locations, demand changes from season to season. Without adjusting your prices daily, you’ll find yourself selling out quickly or struggling to find bookings. Ultimately, money will be left on the table.
Here are some of the most important factors to consider when adjusting your rates to demand.
Seasonality: Most destinations will have high and low seasons. During high seasons, demand soars. The opposite is true for low seasons. By setting higher rates during the high seasons, you’ll rake in more profit. By lowering them during low seasons, you’ll help retain maximum occupancy.
Holidays and events: Are there special events like seasonally-based festivals in the area? If your Airbnb property is in a destination that will attract visitors, clock your rates upward to make the most of it.
Weekends: A form of best practice is to set higher rates on weekends. Particularly if your short-term rental property is in a popular city or holiday destination, weekends see higher demand. Airbnb allows you to add an extra fee for weekends. This should be 10-15% of your normal rate.
Hosts have the option to turn on Airbnb’s Smart Pricing feature. Smart Pricing is a tool that automatically sets the prices on your listings based on shifts in market demand. It’s a helpful tool if you can’t constantly watch and adjust your rates.
Airbnb’s pricing algorithm scans demand for listings similar to yours. Using the data collected it finds what it considers your property’s best nightly fee. This handy feature accounts for over 70 different factors. This includes important factors such as the booking window, rental property popularity and reviews.
You can still set a minimum nightly fee; however, ensure the tool doesn’t reduce your rates below a set threshold. This provides a level of control on your end. The algorithm won’t override any of your other pricing features either. And you will always be able to manually adjust your nightly rates at any time.
All things considered, adjusting your STR property rates is a challenging and time-consuming task. This is especially true for hosts with multiple listings.
The solution is dynamic pricing. Using this state-of-the-art technology, your rates will be automatically updated throughout the year. Dynamic pricing is the most efficient way to optimize your Airbnb property rates and maximize your income.
Keybee’s dynamic pricing tool is an example of a dynamic pricing tool that will do this for you. The advanced tool uses property profile characteristics, seasonality and demand data to set the best property rates with pinpoint accuracy. The in-house-built pricing algorithm will get your Airbnb properties booked at the highest rates possible. As opposed to most other property management companies, Keybee doesn’t have a “set it and forget it” approach to dynamic pricing. Pricing tools are good, but they need to be monitored. This is were we differ from the competition, as this is done by our experts on daily basis.
As we’ve outlined, calculating the right amount to charge for your Airbnb requires several crucial factors. Although it’ll take considerable time and effort, you can do it all manually, but most likely would be outperformed by Airbnb professionals, like management companies in your area. However, with the explosion of Airbnb, increasing numbers of short-term rental management companies are available to help.
Using a professional short-term rental management company, they’ll set the best rates for your Airbnb properties on your behalf. With expert insight and equipped with a dynamic pricing tool, they’ll take care of the details and consistently get your properties booked while maximizing profits.
Place your property in the hands of experts and watch your income from it multiply
Our proprietary, income-maximizing pricing algorithm calculates the optimal daily price for your rental and increases your income by up to 20% compared to the average host.
Guests have access to the rental property as soon as they arrive.