How to set prices on Airbnb, within reason, is quite simple if you follow a strategy that works. This means you should focus on occupancy and not setting high rates, on getting more reviews and eliminating resistance to book. Read the following FAQ where I discus high rates and time-to-action (demand).
Read FAQ (Will I Make Money Setting High Rates On Airbnb)
To set prices on Airbnb depends on the number of reviews we have and the established demand. Assuming we list a new property with no reviews and the owner wants to maximise income annually; we go through the following with the owner:
- After we have qualified the accommodation as being remarkable we discuss the owner’s income expectations.
- It’s critical to know what annual income the owner expects. The owner, in most cases, tells us; “you are the experts you must tell me!”, this is correct; we are the experts and we will guide the owner but an owner without some expectations is a concern. The owner may want to cover costs, her bond, or make at least what she can do renting it out long term. These are good starts and we can work with that.
- We use the owner’s annual income, plug it into our income calculator and see what seasonal Airbnb rates and occupancy are required to achieve it. We start off using 35% occupancy as a guide and we adjust the rates to try and achieve this owner income. If we can generate the income at 35% occupancy and the rates are very competitive we know we have a great opportunity to meet or exceed owner income expectations during year one. If we need 40% occupancy or higher or even higher rates we know this owner – agent relationship may not kick-off very well. Either the owner should lower her expectations or we would decline.
Airbnb Pricing Strategy Philosophy Part 1
Airbnb Seasonal Rate Calculator Part 2