When done efficiently, the earnings you receive from your Airbnb listing can drastically increase by adapting your price points. Cleverly crafting a pricing strategy for your listing is the key to rental longevity and income reliability. A study by the International Journal of Hospitality Management concluded that dynamic pricing undoubtedly has positive impacts on an Airbnb listing’s revenue performance, so if you’ve been approaching it as a minor detail so far, it might be time to give your Airbnb listing a rethink.
This article will give you a sneak insight into the key pricing strategies you can utilise to make the most from your Airbnb listing, literally!
Finding the Right Airbnb Pricing Strategy for You
There are three widely used pricing strategies Airbnb owners implement to maximise their earnings. Let’s take a look.
1. Smart Pricing
In 2015, Airbnb launched ‘Smart Pricing’ in an attempt to help host price listings more competitively and “maximize the money they earn on the platform”. Smart Pricing gathers supply and demand data based on various factors, including guest activity on the platform, seasonality and special events. Using this data provides recommended prices uniquely tailored to each individual property.
Smart Pricing sounds good on paper, but in practice has run into quite a few issues. The Airbnb ‘Community Center’ is littered with negative reviews of Smart Pricing from hosts, who complain that the system has been offering listings at ‘a much lower rate’ than they would manually set, with many choosing to turn it off entirely.
If you’re looking for greater control and optimisation of your pricing, consider partnering with an Airbnb management company. These companies often have specialised teams who can expertly manage your listings for maximum accuracy. For example, Frank Porter’s listings team creates, lists and updates your property listing on various platforms where they advertise. Once everything is live, the team continues to monitor all platforms and make updates when necessary.
2. Manual Pricing
Many hosts decide to simply stick with manual pricing, exploring the Airbnb market to assess the going rental rents in the locality. Airbnb recommends thoroughly considering your target audience and their key attributes and preferences before manually pricing. What type of people are currently booking your property? Are they professionals able to pay a premium, or maybe they’re students looking to book a city break on a budget? This will give you another good indication of what sort of price to set your property.
Manual pricing is great because it gives a host complete control of their listing. However, it can become especially precarious if you’re managing multiple properties, as constantly adjusting them all depending on local events and seasonality can be difficult to manage.
3. Dynamic Pricing
If you decide to go ahead with dynamic pricing, you can maximise your earnings. This means adapting your listing price based on increased demand. To do this effectively, re-consider how much you’re charging on weekends and holidays, and keep an eye on anything going on in the local area that could increase the demand for your listing. With this being said, when it comes to dynamic pricing continue with caution — it made national headlines in Australia and New Zealand when Airbnb hosts began to relist their properties for double the price than usual when Taylor Swift was touring in Melbourne.
Bonus Tip: Set Minimum Stay Requirements to Maximise Earnings
A lot of hosts opt for a one-night minimum stay on their properties, especially if they are based in cities where guests tend to hop around. However, it might be worth rethinking this if you want to maximise your Airbnb earnings. If you have a property that really is one of a kind, setting a two-night minimum (or longer) on a property will at a minimum double your earnings. After all, guests who are after your unique property specifically are likely to be flexible when it comes to a one or two night stay.