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Pricing

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.

Security Deposit

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.

 Cleaning Fee

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

Photo credit: ~jjjohn~ / Foter.com / CC BY-NC-ND

 

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7 Comments

Morgan Solem · October 10, 2014 at 10:49 pm

Great post! It seems like setting the right price is something that lots of hosts struggle with. Looking at similar listings in your area with lots of reviews is a great way to get a sense of the right price range, but don’t just try to match or beat your neighbors. With a detailed listing and thoughtful amenities, you can still book guests even if you charge a bit more.

My team at Beyond Pricing (www.beyondpricing.com) adjusts rates every day to keep your prices in step with demand. We think it’s not just about being fully booked, but being booked at the right price.

Thanks for all the great tips!

John · December 15, 2015 at 11:24 am

Hi, great article, thanks (I realise its over a year old). We’ve JUST started hosting and our first guests are arriving next week.

I’m wondering about the cleaning fee. It seems a little unfortunate to me that I can only set a set cleaning fee. In other words, if someone stays one night they pay the same cleaning fee as someone staying 7 nights. While I get that for a self catering apartment like we have we don’t clean in between so technically that’s correct, the issue is that the price of cleaning is absorbed so much better by the 7 nighters whereas it adds substantially to the single nighters.

Any advice?

Chris

Chris · December 15, 2015 at 9:48 pm

Hey John, thanks for reading!

Cleaning fees are a tricky thing. In theory, the process for cleaning should be roughly the same whether someone stays one night or 10 nights right? In both instances, you’d clean the sheets, empty the garbage, etc. My advice to you would be to realistically calculate how much time and effort that cleaning will take. You may be paying a cleaning crew a flat fee or doing it yourself, but either way, there is a cost associated with it. Once you have that number you should feel confident adding it to the cost of a one night stay or longer. I think most Airbnb guests understand the idea of cleaning fee and don’t think twice about seeing it on their bill. My guess would be that no one would question it but if they ever did you could give them a line by line explanation of where your cleaning fee came from.

Hope that helps! Also, if you have any other specific questions as a first time host I’ve recently started conducting personalized 1-on-1 coaching sessions with Airbnb hosts who need help. Feedback has been great so far and it may be really helpful for you as you get going.

Check out the link on the site or drop me a line at info@darebnb.com if you’d like to set one up!

Katie · March 2, 2017 at 3:02 pm

I have been asked for someone’s reservation to sort out the cancellation fee on a double booking. Cannot find it anywhere. Any idea where to find it pls. Thanks. Katie

Chris

Chris · March 5, 2017 at 2:09 am

Hey Katie, thanks for reading! Checking on past reservations is easy. All you have to do is click on the button that says “host” then “view reservations” then “past reservations”. Then you can see all of the reservations in question. Just click the one you need and you’ll see a button to print it. If you’re still having trouble, feel free to send me a note at info@darebnb.com

5 Important Questions to Ask When Setting Minimum and Maximum Stay Limits on Airbnb | Darebnb · February 21, 2014 at 1:33 am

[…] offers lots of pricing options including dynamic daily pricing that you can manually set, special weekend pricing or weekly and […]

Get Your Home Airbnb Ready With These Fab Tips | Fun and Food Cafe · February 9, 2017 at 11:17 pm

[…] Carefully About The Price When you list your room on Airbnb, you get to set your own nightly prices. If you are completely new to Airbnb and don’t have any reviews from guests on your profile yet, […]

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