How to Create And Optimize Your Airbnb Listing – Pricing strategy
Welcome back to the last part of the series. In this post, I’ll be talking about your pricing strategy. I’ll share with you on how you can quickly determine your market value, ramp up as a new host, and maximize your nightly rates to get the most of your listing.
I linked to part one, two and three below. It’s a sequential blog post series that builds on top of each other. It’ll make sense if you started from part one, but if you just want tips on pricing, then this is the post to read.
Part one: creating and marketing your listing
Part three: calendar settings to minimize turnaround time
How to Quickly Determine Your Market Value
Unfortunately, there’s not a shortcut to this. You’ll have to use Airbnb to do your research.
Step 1: Go to Airbnb.com. Look up the city that you’re interested in. Let’s say it’s San Francisco. Type “San Francisco” into the search on the top left corner. See picture below.
Step 3: Click on “Homes” under “Explore San Francisco”. Scroll to the bottom and it’ll tell you how many rentals are available for rent. If there are 300+ rentals, it’s a good sign that there’s an opportunity for you.
Step 4: Click on the “Home type” and filter out “Shared Room” and “Private Room.” This is important because it’ll further narrow down your competition. Let’s just focus on “entire home”. Go one step further and filter out places that can accommodate 4 or fewer. In my opinion; I find it that in order to maximize profit, 4 is the max for 1-bedroom and 6 is the max for 2-bedrooms.
How to set your Pricing Strategy as a New Host
The trick is to undercut your competition to build up as many reviews as possible. Airbnb is a community that relies on reviews.
And as a new host, you’ll need to reduce the daily price, especially for your first booking. I recommend pricing your place 15~25% under your estimated market value then slowly increasing your rates as the reviews start coming in.
And please don’t trust Airbnb’s “suggested rate,” because they haven’t yet refined their analytics to the point that their tool is very helpful. For example, the tool suggests that I list my apartment for $109, but my average daily rate is closer to $190.
Do not turn on smart pricing.
I repeat, DO NOT!
I say this because I have done my research. In a nutshell, smart pricing will automatically price your daily rates and it is usually well below the market rate in order to compete with hotels.
There is a tool that I use for automatic pricing. It is a company called Beyond Pricing. If you are curious about it, you can sign up here through my referral code. If you want more information, check out my new blog post on why smart Airbnb hosts do not use Smart Pricing. My readers will get an exclusive deal of 1 month free + 30 dollars in credits for the second month!
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