Today’s guest post comes from Ian McHenry of Beyond Pricing. Beyond Pricing is focused on developing pricing software to help hosts & owners maximize the performance of their vacation rental properties. Sounds pretty good right?
And now on to Ian’s post….
At Beyond Pricing, we look at a lot of Airbnb listings and we talk to a lot of hosts. We thought we would summarize the top 5 mistakes we see people make when pricing their place on their own.
- Overbooked and underpriced
This is by far the biggest mistake experienced hosts make. They are easy to spot, because their next 3 months are almost entirely booked. In most cities, especially on Airbnb, a large percentage of bookings happen in the last month and in places like San Francisco, almost half of all bookings are made in the last 30 days. By booking up too fast, you are leaving money on the table. Sure, increasing your price and not having your calendar fill up until closer to the stay date might seem scary, but the alternative is losing lots of money. We provide our users with an easy to understand Health Score to let them know if they are overbooked and can increase their average price. Check out some of our blogs on why your overbooked Airbnb is costing you money and how to figure out the right average price for your Airbnb.
- Not increasing prices for events
The second thing we look for when someone says they do just fine with their pricing is whether they have increased prices for the top events in the city. There are usually 3-4 events where prices will nearly double in a city and they are often recurring. Good examples are holidays, large conferences, and large concerts (Lollapalooza, Outsidelands, etc.). The way we can tell that someone underpriced for those events is that 6 months out they will have no bookings for any days in that month except the day of the event. We see this every years in San Francisco with Dreamforce, an event that causes Airbnb prices to increase 2-3x.
- Increasing prices for non-events
We call this the Thanksgiving effect. In some cities, especially ski or beach destinations, families will celebrate this holiday away from home at a vacation rental. However, in most cities like San Francisco, people are leaving the city to visit family in the suburbs and moreover, they are listing their place on Airbnb that week, driving up supply. Christmas and Thanksgiving are actually too of the slowest days for bookings and we typically advise people to lower rates on these days. However, Christmas in London – huge day! So either use Beyond Pricing to know what kind of city yours is or at least take a peak at hotel prices relative to a normal day and see if they are up.
- Not increasing prices for weekends enough
In some cities, like Madrid, Portland, Amsterdam, San Diego, and others, weekends have much, much greater demand than weekdays. Occupancy can swing by 30% from weekdays to weekends. The best indicator that your weekends aren’t priced high enough (or your weekdays aren’t discounted enough) is that all your weekends are booked and very few of your weekdays. Again, you can always check out hotels as a decent proxy but knowing the differences in Airbnb and vacation rental demand for weekends is much better – which you can see on your Beyond Pricing calendar.
- Not discounting for slow season
Most experienced hosts have at least some difference in their seasonal rates because they’ve learned from experience that they might not get any bookings in the low season if they don’t decrease their rates. If you live in Chicago or London and wonder why in January you aren’t getting any bookings, it often has nothing to do with Airbnb changing its search algorithm or some bad review you didn’t realize you received and everything to do with needing to drop your prices. Hotels will often set prices at half off peak rates for the low season.
Take a look at your rates and see if you’re making any of these common mistakes. If you are but you don’t want to have to think about what to do, check out our price recommendations and automatically sync them to your Airbnb or other listing site here: www.beyondpricing.com
Huge thanks to Ian for the guest post! Remember you can test out Beyond Pricing for yourself right here