How do you set your base price?

[Dara11]

I hosted a camper as an Air BnB in 2018. It was booked 28-days a month for 6 months. (My property is pretty nice, and I have horses and other animals!) The city stepped in and said I couldn't use it. It took me a year to find a suitable replacement and now I have $175k invested into 2 tiny homes on my property. They were finally ready mid-April. And since listing them, they pretty much booked solid, at this moment both of them through the end of May and into June.

Do I have them priced too cheap? How do you decide your perfect price? I am not a greedy person, and I don't want to overcharge, but it was a huge investment that I'm hoping will be providing me income as I inch my way into older-age 😉 so I don't want to be being stupid.

How have you all set your pricing to get your place priced "just right?"

Thanks in advance 🙂

[Helen3]

By doing research with your competitors with similar properties to see what they are charging @Dara11 

[Mark116]

@Dara11  $55/night for 4 guests I think is probably too cheap, but as @Helen3 said, you should see what other places in your area charge.  At least you might add an extra guest fee after 2 guests.  And since everything is brand new, you may be able to charge a slight premium above what your competitors charge.

[Jessica-and-Henry0 · Accepted solution]

@Dara11 

Agree with @Helen3 and @Mark116

$55/night for 4 people sounds way too low..... even without knowing your market. Do you want to target couples? A group of 4 adult friends? A family of 4? Depending on the type of guests you want to attract, you'd have to adjust your pricing strategy. Also, think about how much less? more? work it is for you to clean and prep your space after a hosting a 2 people vs. 4 people. 

Fyi, I look at several factors.

- Price of my competition (listings that are in the same area, provide similar settings and target the same guest group). Because I have a private room listing, I also look at nightly rates of budget hotels and guest houses in my area. 

- Cost of hosting (amenities, cleaning, laundry, snacks.......) : Usually 'no guests = no expenditure' type items. If you do your own cleaning/laundry, you should be paying yourself. 

- Monthly bills (heating, electricity, water, internet, cable.......) : Items with a "base price" that may or may not increase with usage. I always budget GENEROUSLY (not everyone is mindful about conserving water/energy, especially if they are not the ones paying the bill)

- High/Low seasons 

Also, I looked at what a long-term rental would cost a typical renter if I were to have a long-term tenant (in my case, it would be a roommate/housemate situation) and made sure I'd be able to earn at least as much as having a long-term tenant with a 40~50% occupancy (from a monthly AND annual base), and at the same time I target to maintain an average 70% occupancy rate.  

I review my nightly rates and check what my local competitors are doing at least once or twice a year to adjust/update as needed. 

Hope this helps~ 

[Debra300]

@Dara11,

Some hosts offer a lower price when first listing their properties to get reservations and reviews.  This may result in a Superhost status and the property appearing higher in search results.  Then they adjust the price after determining how much effort is required to maintain the space, and doing market comparisons.

Just curious, wasn't the currently active short term rental restriction in Florida imposed around March 27 and has been extended indefinitely?  

[Dara11]

I have only had 2 people who wrote to me who were not permitted to book because of the rental restrictions. Otherwise I've hosted several health care workers and people who are in town for other work, and things like that. One lady was here for 2 weeks after returning from her job in NC, I think she was "self-quarantining" before going on home where she lives with her elderly parents and grandparents. One family was with me for 2 weeks also because they were sort of 'homeless' at the moment. And then I have had several local people come for just one or two night stays - people who have been trapped at home for a month and just want one night off by themselves. Since my space is off away from my house by itself maybe that makes a difference. I don't really have to have any contact with people, though I do always go over and meet them. But it's easy to clean the space completely between each guest so it's not really a COVID threat to anyone.

[Dara11]

I'm new to this asking questions of the community...and am feeling like clicking the "most helpful" button sure made a big thing happen that I wasn't expecting. 😛 Thanks for all responses.