how to find the sweet spot in pricing

[Michelle162]

Hi there, I am full all the time which in the normal market economy usually means I should increase my pricing to match demand (forget about smart pricing please!).  I have done so very nominally, but now my value for money ratings are dropping.  Does anyone have any suggestions on how to find your "sweet spot"?  For example, blocking out days so I can clean thoroughly.  Or has anyone increased their service levels to sustain a higher rating with an increase in price?  suggestions appreciated. all the best, Michelle

[David-and-Fiona0]

Before I respond more fully are your bookings dropping in relation to your star ratings? 

[David-and-Fiona0]

Sorry I just reread your post about being full. I wouldn't do anything unless your occupancy drops. Star ratings is one thing, bookings another. 

[Michelle162]

yes, thanks for the pep talk!  I find myself being a slave to the reviews sometimes.  and sometimes people cannot be pleased because I am not a hotel and they expect hotel levels of service such as endless hot water (we still use hot water cylinders in Queensland lol).  but if they want to live like a local...maybe they should pay my power bill???  (i jest)

[Pete8]

You Need to know Your market And Customer.......And what is it that will make them repeat and/or provide referrals (good reviews)....If you have that already (fully booked) then you have Your "sweet Spot) ....Unless you Are running a hotel with 100 rooms.(and could be very impactful financially)...any thing more token price increases risks ruining The good thing that u have .IMHO

[Melanie58]

Was it a big price jump?  Maybe you could walk it back and see if ratings improve?  (not go back fully to the lower price, but something somewhere between the new price and the old price?)

Nothing is forever, so you could try out the in between price for awhile and see if it makes a difference?

[Michelle162]

I increase the price by around $20 AUD per night.  with an increase in price came an increase in expectations, of course.  thanks for your response and I take all advice on board!

[Linda108]

Hi Michele, This is an interesting and ongoing conversation for all of us to continue to contemplate.  I too made the decision to raise my rate once I had Super Host level and a sufficient number of reviews to aid potential guests in making a decision.  I studied my closest  competitors and raised my rate by about 50%.  Additionally I decided I would rather have fewer guests and still maintain a similar profit.  I have Instant Booking (by choice) but have the day before and the day after blocked out so I can straighten up without stressing out. 

[Michelle162]

Hi Linda,

yes it is very interesting and very tricky to find that spot where you can minimise wear and tear on your chattels (furniture, door handles, locks, appliances, linen etc), get maintenance done and still maintain the same profit.  I would prefer to raise prices and keep some days free instead of running at full capacity.  I will consider blocking out days before and after stays, thanks for the suggestion!  This will also allow for early check-ins and the like - gives more flexibility - which the guests definitely like.  Unfortunately I will not be getting superhost status anytime soon but have built up enough good reviews to see me through (I hope!).

kind regards,

Michelle

[Ana-Luisa4]

I just started hosting and at the beginning Airbnb offered 20% for the first 3 bookings.  After that, I started smart pricing and I indeed booked the place at a very low rate.  I gained some great reviews and now I am trying to go back to my original price of $65.00 and I have had some days when the place is empty.  

I also think lowering the price may bring some guests that won’t take care of my furniture.

What are your thoughts on this?

[Linda108]

@Ana-Luisa4   You are posting on a pretty old discussion thread (2016) but pricing is always an issue.  In the last 3 years there has been a HUGE increase in the number of listings.  Along with that increase in listings is an increase in negative reaction to short term rentals.  You are joining a dynamic business model, so be careful about how you use this opportunity. 

Going after continuous bookings has a down side including your burn out.  I am as busy as I want to be but I am retired and ot dependent on the income.  I have a private room listing so the guests are actually in my home.

I increased my rate when I offered additional amenities and had fewer bookings with an increase in net profit and reduction in headaches.  Smart pricing seems to be oriented toward quantity over quality, both for guests and hosts.  If that works for your business plan, go for it.  If not, look at your competition and see where you land in pricing.  

[Ana-Luisa4]

I realized that I had a very old post!  The m you for your reply very informative.  

I will start a new conversation on this so it is fresh!