How do you price your listing?

[Stephanie]

Hi everyone,

It can be a rather daunting task, trying to decide how to price your listing. Taking into consideration factors such as neighbouring listing prices, location, seasonality and just how swanky your listing is can take a lot of balancing, and we see tons of Hosts asking for advice on this all the time on the CC.

Some Hosts use the Smart Pricing tool, but it seems the majority go with their own research, knowhow and gut.

How do you price your listing? What factors get you to raise those prices?

I’m sure your tips could be beneficial to new and restarting Hosts alike so I’m keen to hear your clever calculations, CC-ers!

Thanks,

Stephanie

[Jessica-and-Henry0]

@Stephanie 

We did something somewhat similar to @Robin4 but not to that level of detail 😅 😅 😅

While we were getting the guest room ready, one evening (while enjoying our after dinner beer) Henry and I pulled out a legal pad and started jotting down all the cost items and very generous estimations. 

Furniture, Bedding/Sheets, Towels - this we considered our "investment" and our goal was to recover the total cost of getting the guest room ready in 6 months or less. 

Cleaning & Laundry - we estimated 2 loads of laundry per stay, and 2~3hrs to clean the guest private room+bath AND shared spaces (living room+kitchen). This was assuming short-term stays with a 2 or 3 day minimum, before we even thought about the possibility of hosting long-term. 

Amenities - very generous budget for TP, shampoo, soap, coffee, kitchen basics (cooking oil, salt&pepper) 

Utilities - since our listing was our main residence, we considered how much our bills would *increase* with the presence of another person in the house. We thought a 25% increase between 2 people vs. 3 people would be more than sufficient. 

Misc. - anything minor we might have missed or unexpected extra expenses. 

One thing to note is that we did not factor in mortgage payments because this was something I would have to pay regardless of whether we hosted or not.  

Separate to this, I did some research to see what other similar places were charging and checked out rates for guest houses, homestays, budget hotels, and looked at how the amenities, location, quality of room affected prices. 

So then we started thinking about what we *could* charge vs. what we *should* charge and came to the conclusion that we would have a 3-night minimum with a certain rate so that we would make a minimum profit of xxx amount per stay, excluding the Airbnb service fee.  

Our 1st guest got us into long-term hosting, and half-way into her stay Henry and I decided we would continue to try hosting long-term exchange students like her, so we re-evaluated hosting costs, tweaked our minimum stay requirements and focused more on how much our monthly payout would be (rather than the nightly rate). At this time, we looked at how much students were paying to stay at dormitories or gosiwons vs. a fully furnished private studio. We also looked at what people typically paid in a long-term roommate/housemate situation and what local boarding houses were charging. 

While we didn't have an exact calculation, we always had a pretty good idea of how much we were making per month and per stay. 😀 😊 

[Elaine701]

I've always been a believer (and in practice, it turns out to be true), that particularly in the hospitality business, if one puts too much emphasis on making money, your revenues will eventually decline. 

Obviously, it's unwise to lose money and wise to keep track of it, but if you see customer satisfaction as your first priority, ultimately, the money just flows in naturally. It's worked for us, anyway. 

And customer satisfaction doesn't have to be expensive. In fact, it's small things that make the most difference.