Introduction to Your Listing Price on Airbnb
When it comes to setting the nightly rate, most hosts often find it confusing on how to perfectly determine and set their listing price on Airbnb. Although, the platform provides a smart pricing tool, there are other dynamic pricing alternatives you may explore to set your rate. And to new hosts, Airbnb usually suggests below the recommended rate in order to start attracting bookings. Generally, pricing tips may not necessary work for everyone, because people are driven by different motives and business strategies. However, if your business goal is to make constant profit and become a Superhost on Airbnb, you must get it right in your nightly rate. That is why I will be offering some tips that can help you get it right when setting your Airbnb listing price.
Factors to consider before listing your price
Setting an arbitrary figure for your price may wreak more havoc on your revenue than you can imagine. There are certain factors you need to consider before putting a price tag on your bookings. And I am here to walk you through them before I show you some of the strategies you may employ to set an accurate Airbnb listing price.
This has got to do with the question of “where is your property located?” There are a number of indices worthy of consideration when looking at property location. These usually include name of the city, street name, proximity to a major landmark, linkage to the highways, any public figure living in the area, and nearness to a sporting center. The list is endless. The thing is that, rental value is always high in the eyebrow areas.
What is your property value?
Value creates value. Whether you are living in a rented or mortgaged apartment, your listing price on Airbnb hangs on how much you paid for the property. To determine your minimum nightly rate, you may simply divide your monthly rent by the number of days in a month, say 30 days. Then, you can factor in other indices like cleaning fees and security to determine your optimum rate.
Cost of maintenance
Another important factor you must consider is cost incurred in maintaining the property. This includes cleaning, security, repairs, replacement, clearing and a lot more. We may as well consider utility bills like gas and electricity. Yes, they all matter but ensure you don’t overload your listing price.
May be you are a popular actor or actress, CEO, speaker or basketball player, that most people want to meet personally. Your listing on Airbnb may become a hot cake. So, use this influence to set your price right.
Also, you need determine from the get go, the type of additional services you want to offer your Airbnb guests. Mind you, these services will come at an extra cost to you, it is important to factor in the extra expenses. Just be open, let your viewers know everything about your services with no hidden charges.
Possible pricing strategy
Having gone through the various factors worthy of consideration before setting a specific listing price on Airbnb, there are certain pricing strategies you may employ in order to achieve maximum result in your Airbnb rental business. These strategies can also be used on other platforms like booking.com, Homeaway or VRBO.
Listing Price on Airbnb: Discounts
Everyone wants freebies; and discount is a veritable tool you can use to offer this to your clients. Discount appeals to human psychology. It gives people the impression that they are under-paying for the value they get. You can give discount to generate new bookings as well as encourage repeated bookings. The caveat is that too much of discount can result in dwindling profit.
Least cost strategy
Least cost strategy means devising a means that will enable you to charge the least price in your area. The first step is to ascertain the lowest price your competitors charge on Airbnb and then decide to price your bookings lower than that. This is possible if you have the capacity to incur the lowest cost in providing high-quality services to your guests.
Off-peak and peak period pricing
Avoid one-size-fits-all pricing model. Contrastingly, there are seasons when rental value is usually high and other periods when bookings are on the low ebb. Charging a single price all year-round may signify inaccurate pricing at a point in time. The truth is, it is always good to vary your listing price on Airbnb regularly whether monthly or seasonally. Set lower prices at off-peak period when bookings are infrequent, for instance during winter; and up your price in periods of higher activities (peak period).
Market penetration pricing
Market penetration strategy is basically for new entrants into the Airbnb business. It involves charging a low price in order to be able to compete favorably with other more established hosts. Adjudged one of the quickest pathways to gain traction and attract your first guest on Airbnb. This may mean offering mouth-watering discounts until you are able to rack up positive reviews that will boost your Airbnb track records.
Market skimming pricing
This is another strategy a new host can employ to set Airbnb listing price. It means coming in as a host offering high value, high taste and premium quality. The strategy is ideal for appealing to the social status and high taste of high value guests. Although the nightly rate may be cut later in form of a discount, this pricing model usually results in higher profit at the beginning.
Listing Price on Airbnb: Final thought
By now you should know there is no hard and fast rule in setting a listing price on Airbnb. Just let your nightly rate fall in line with whatever goal you want to achieve on the platform. The bottom line is that you must charge prices that accurately reflect your property value, location, services and operational costs. Breaking even is the key and making profit is the ultimate goal.
Also published on Medium.