What is your place worth?
People often have a difficult time finding the right price for their space? Is this too low, am I over-charging, will people pay this much?
Relax, there is no easy answer to this question, but let’s approach it from a few angles and see what we can come up with.
How much is your rent or mortgage?
The logical place to start is to look at your monthly rent or mortgage payment and then divide that by 30 to find a rough nightly rate. Pretty simple right? That will at least give you somewhat of a ballpark.
Check out the competition
Whether you realize it or not, you’re in competition with hotels, hostels, campgrounds, and all other Airbnb listings in your area. You already have an awesome profile description and eye-catching photos but you need to priced competitively to stand out from the crowd. Do a quick search to see what other listings are going for in your neighborhood. This will be easy if you’re in a city, but if you’re in an area without much Airbnb activity it won’t help as much. The goal here is to be in the same range as other listings.
Perks and Add-Ons
Does your place have a washer/dryer? Cable? Fancy linens? Free fruit basket or bottle of wine with each stay? If you feel like you’re offering additional things that the others lack, don’t be ashamed to charge more for them! Do guests get access to a parking spot or additional garage storage or communal space? These are things that would cost them extra if you weren’t including them, so there is no problem considering them when setting your price.
Start Low, Aim High
When you’re first starting out you should be focused on getting your first guest and more importantly, your first positive review! Sometimes this means you need to lower your price to undercut the competition.
Let’s face it, some people are going to be looking for the cheapest accommodations possible. And if you so choose, yours can fit that bill. Now there is no need to be ridiculous, but if you see all other listings at $100 per night, you should try posting yours at $75 to see if that attracts attention.
Once you get a few guests you can start to gradually raise your price as the market demands.
Know Your Limits
One great thing about Airbnb is that it’s an ecosystem that virtually governs itself. Meaning, supply and demand will dictate the pricing of the service. If you raise your prices and people are still willing to pay then everyone wins. If your listing isn’t getting the traffic after a price hike, you may have raised it too high.
Special Events & Holidays
No, of course you don’t want to rip people off….but it’s a good idea to adjust prices for weekends, special events and holidays. All the hotels do it, so why shouldn’t you? Luckily, Airbnb makes this super easy with their pricing tool and their advanced pricing calendar. You can adjust pricing based on season, raise prices for all weekends, or manually adjust pricing for times when you know there are special events or conferences going on in your city.
Once you’ve sent your standard nightly price, it’s important to look at a few other charges. First, it’s important to institute a security deposit just in case something goes wrong. Yes, Airbnb does include insurance (LINK NEEDED) but the security deposit will have you covered for minor things like broken dishes, scuffed floors, “borrowed” kitchen appliances, etc. There is a very strong chance that you won’t need this, and it won’t be deducted from the guests’ account unless you authorize it, but it’s a smart idea. A good bet is to set a security deposit that is at least the amount for one night’s stay.
A cleaning fee is something that people often overlook when they’re first creating a listing but it’s very important. Whether it’s a maid or cleaning service or you yourself, it takes time, money, and energy to keep your place tidy for guests. You should absolutely set a cleaning fee to cover this expense. This will very by the size of your place but $50 is a good starting point. This will cover cleaning the sheets, mopping, vacuuming, cleaning any messes in the kitchen, etc.
Extra Guest Fee
Airbnb allows you to charge an additional amount for extra guests. Your place may only be comfortably large enough for two guests. But, with this feature you can allow a third or fourth guest for an additional fee per night. This helps increase your pay day while giving you some extra profit for picturing your place at capacity. Obviously there is more chance for mess or problems with more people, so the charge makes sense. Say you’re charging $25 extra per night for each guest after 2. For a 3 night booking that will net you an additional $75 or $150 if there are 4 guests total. It adds up!
Go With Your Gut!
At the end of the day you need to set a price that you feel comfortable asking. It needs to feel like a reasonable amount that you’d want to pay yourself. It should also be an amount that is enough to cover your cleaning/planning/worrying/stress. Because if you’re putting in a ton of work trying to make your place immaculate, you want to have something to show for it monetarily. Don’t be ashamed to ask for an amount that you feel properly compensates you.
Get Some Help
When all else fails you may need some help finding the right price for your Airbnb listing, That’s where Beyond Pricing comes in. They’ve become the experts in using dynamic price modeling, statistics, algorithm design, and real estate analytics. All that sounds confusing, but it’s they do a great job of simplifying things. Bottom line, they help you maximize your pricing and eliminate those unbooked days. Sound good? Don’t take my word for it, go give Beyond Pricing a try and let me know what you think in the comments!
Hopefully that helps clear up any pricing confusion. Still confused? Ask your questions in the comments below or reach out on Twitter @darebnb