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!
Obviously it depends on a lot of factors. All that you mention.
For our patch, the rule of thumb for a well rated accommodation is 50-70€ per night, per person or bedspace, which you can consistently get in low or high season.
We can comfortably accommodate 8 pax, but there is a seasonal difference;
In summer, we will get bookings for 6 or 8 pax without fail. So, we flat rate at 400 per night for the entire villa.
In winter, it's rare to see parties of 6 or 8. Normally 2-6. So, in winter, we price it on a per person basis, because if we priced it for 8 as a flat rate, it would price us out of the market.
And I can assure you, that hosting 2-4 is much less expensive than hosting 8. Especiallly in winter, when it's likely we'll need to heat. But there's laundering the bedding, cleaning more rooms, etc. And 6-8 people stay up later, use more energy, etc. A couple usually goes to bed at 11:00.
Pandemic notwithstanding, we generally manage to stay pretty well booked in winter using this strategy. Summers are pretty much guaranteed anyway.
Well, that's our story. You asked 🙂
I would like to add, that one problem with our seasonal pricing structure is that Airbnb doesn't provide any method to change from flat rate to per person rate on a seasonal basis, so we have to have two listings for the same property.
So, in the summer listing (April - October), November through March is blocked.
On the winter listing, April - October is blocked.
The upside is that it's a workaround. The downside is that each has their own reviews and ratings. After we separated them, it took a year to achieve any decent ratings with the second listing (we deliberately chose summer for the new listing, because bookings are pretty much guaranteed in that season). But it took a while.
This adds some additional burden of management, but it's the only way to get around this. I've repeatedly explained this to Airbnb over the years, and suggested adding this feature, but have never received any reply.
I began hosting two listings in September 2020. My listings, Sabee's Home Away From Home and "An Excellent Place For A Short Stay Get Away are located in Nassau, The Bahamas and approximately 90% of guests are locals or from one of the family Islands of The Bahamas. Tourism, our number one industry has been impacted by the COVID - 19 Pandemic. My listings are able to accommodate three persons and my nightly rates are $85 and $90. I have been running a constant nightly rate and is requesting advice in my pricing in regards to different nights and how to maximize the best rates. your advice is greatly appreciated. May I add at this point that I am presently a Super Host and is eternally grateful. All of my guests have given me good reviews and I am desirous of giving every guest a WOW! experience.
I consider all of the factors that you've mentioned, and others like the following:
- Determine the desired result of the rate - If I want to fill in some empty nights in between stays, I may offer them at a discounted rate. Of, I may offer generous length of stay discounts if I want to attract longer term stays.
- Perform market comparison for similar properties to mine in my area. When making my analysis I try to quantify the tangible differences in what I offer vs. my fellow hosts to help me set my rates.
- Set a price to attract my target guest. I have learned that setting a rate too low appeals to a type of guest that are not fully appreciative of what we provide. I try to find the sweet spot to get guests who realize the value for money we offer, and know how to take care of the space during their stay.
Firstly I set up a profit and loss sheet that takes into account all relevant costs that I will have to cover to have guests stay here. If you don't do this you have no way of knowing if you are making money or losing it!
Here is the P/L sheet that I use......
Obviously I am not doing this to make a living so, provided I get around $350.00 per week to put in my pocket, I am happy with that. It gives me an interest and makes our lives just that bit more comfortable.
Secondly, I do not offer discounts up front.
Offering a length of stay discount can be abused! The guest can book a 2 week stay for a nightly discount of 15% as Airbnb suggests. The guest pays, arrives and reduces their stay duration to 6 nights and gets a pro-rate refund.
The host gets stiffed into supplying a 6 night stay at a 15% discount instead of the regular 6 nightly rate.
That is not to say I don't offer discounts....I do, but I will assess what discount I will offer the guest as a refund at the end of the stay when I can assess what discount will be applicable for that stay. That way I don't get shafted.
Thirdly I take absolutely no notice of Airbnb's pricing tips. These pricing suggestions are solely designed not to let a booking escape from Airbnb to another booking site. They are not based on helping the host, they are there for Airbnb's benefit. If you listen to Airbnb your listing will never be cheap enough.
Although not showing up on my profit and loss, I put $3.50 per guest night into a separate account that serves as a damage fund.
That account currently sits at around $1,600 and if something gets broken or stolen, I don't bounce the guest or Airbnb, I just pull the required amount out of the damage fund put things right and get on with hosting.
By taking these steps I never get any surprises and I feel I have total control over my property pricing.
I’m fairly new to this platform so tended to offer rates lower then comparable properties to build up reviews. Then the pandemic hit and I paused my listing for several months. Did limited summer stays last year. To price stays for high season 2021, I did what @Robin4 recommended (saw it on another post) and did a profit loss. Based on that I raised my rates. I plan to do some renovations in the fall and adjust rates accordingly.
Good on you Ann, you are doing things the right way.
I did a full profit and loss for friends of ours who also host with Airbnb. By the time we accurately put a figure to all items they were shocked to learn that they were making less than $10.00 per hosting night. They immediately put their price up $25.00 per night and introduced a $30.00 cleaning fee, are now making money and their bookings are still just as strong as they were when they were oblivious to what their hosting was costing them.
It pays to run a monthly activity sheet to keep track of business. This is an old one from 2018.
On the computer I can pull up any of the 400+ stays over the past 5 years in seconds and get a full breakdown of cost for return.
It also comes in really handy at tax time and saves a considerable amount in accountancy costs.
@Stephanie We just look at other prices being charged. We ignore the low and high ones. It is a real shame smart pricing cannot be trusted due to the ridiculously low suggested prices on the calendar that even in non pandemic times suggest we charge £40 a night for a 6 person 3 bedroom apartment.
There are a lot of factors involved, but I keep mine priced lower than what I could be getting to satisfy the "value" rating that guest have to include with their review. Airbnb must want to keep the rates lower. The value and location subcategories have been widely condemned by host, but especially the value, translates, "Mark this one down to negotiate a lower rate on your next stay!" I've had guest tell me in person they loved the place, planned on returning then mark me down in the value. I'm not complaining or looking for any free advice about how to manage my listing. Its best to understand Airbnb policy and work around what's best for each situation.