Column: How To Price Your Airbnb Rental

[Column written by Ade Brown]

About 60% of your potential income comes from the intrinsic value of your property, location, and amenities. The other 40% is dependent upon implementing an effective Airbnb pricing strategy.

Your strategy should take into account the fluctuating demand for your property throughout the year. Airbnb allows you to set different prices for any given day. In order to maximize your revenue, you want to take advantage of this flexibility.

Let’s start by determining the value of your Airbnb listing.

The following is a step-by-step system to assess your listing’s optimum Airbnb price.

Step 1: Find Competing Properties

Use the standard Airbnb property search tool to look for similar properties in your area. Limit your search to listings with the number of bedrooms and the maximum number of guests that your place can accommodate.

If a property is already booked it will not show in your results. So search for dates 3-6 months in the future. Make the length of your stay at least three days and less than a week to get as many results as possible.

Step 2: Find Your Geographical Competition

Center the map on your property and zoom all the way in. Now slowly expand the map until you have between 10 and 20 properties showing.

Step 3: Identify Comparable Properties

Select the five properties that are most comparable in terms of size and quality. Also focus on listings that have the most reviews.

Hint: When possible, identify listings with at least ten reviews. As established hosts, they will be charging full market price.

Write down the listing number for each property.

Step 4: Review the Calendar for Each Property

Investigate the calendar for each property. Determine the price and estimated occupancy rate of each listing.

Note: If a date is unavailable, then this can be for one of two reasons. The property is booked OR the host has manually blocked the date. Some hosts rent out their property on a part-time basis. These hosts manually block out the dates that their listing is unavailable.

This makes it difficult for you to establish the true occupancy rate for a given property. For this reason, I recommend looking for properties with limited short-term availability that also have at least 2 reviews per month. The combination of these two factors indicates a high occupancy rate.

Finally make some additional mental notes about your shortlisted properties. For example:

• How many bookings do they have for the current month?
• What about next month?
• Are they increasing their prices over the weekend?
• Do they offer a weekly or monthly discount?
• Are they changing their rates according to the month/season?
• What furnishings and features do they include?

Step 5: Create a Comparison Price Table

Create a table to compare the prices of each property using the information you’ve just gathered.

Step 6: Estimate the Maximum Revenue for Each Property

Tip #1: Special Events

Special events bring the potential for big bucks. If there’s a music festival, marathon, or sporting event, you may be able to charge up to 3x your average daily rate. At peak times, people start looking for bargains early. Make sure you don’t miss out on the opportunity to earn more money from the influx of tourists with deep pockets.

Find out what other properties in your area are charging for big weekends. But don’t assume they have as much foresight as you. Hold your prices high later than usual. Many last minute planners have the most money to spend.

Lastly, make an effort to research special events at the beginning of each year. Take a look at a the Bermuda tourism website and events calendar. I’ve had guests book my apartment over a year in advance, so make sure you don’t wait until the last minute to adjust your prices.

Tip #2: A Cheap Trick – The Elusive Advertised Rate

The advertised rate is the rate Airbnb publishes on the main page of the search results along with your lead photograph. If there are no travel dates selected, Airbnb displays your base rate.

Make your base rate extremely low, about 20% off your actual rate. This is the price that’s displayed until someone selects your listing. When a user selects your place and specifies travel dates, the actual price for those days will be calculated. If your listing is a bit more than they wanted to spend, but they love it… they will still book it.

- Ade Brown is a co-founder of AirHandled, a start-up company that aims to provide linen-for-hire, cleaning, supplies and management services; catering to short term rental properties that list on websites like Airbnb, TripAdvisor, and Booking.com

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