How to Set Your Airbnb’s Initial Pricing and Leverage Dynamic Pricing for Maximum Bookings

Getting your Airbnb pricing right from the start is key to attracting guests and boosting revenue. By setting smart initial prices and leveraging dynamic pricing, you can ensure that your listing remains competitive while maximising bookings. Here’s how you can effectively set your initial rates and use dynamic pricing tools to keep your Airbnb profitable year-round.

What Systems Can You Use to Manage Pricing?

To keep your property competitive and maximise revenue, you can use a dynamic pricing system designed specifically for short-term rentals. These systems function like those used by airlines and hotels, automatically adjusting prices based on real-time data, such as demand, seasonality, and market conditions. Tools like PriceLabs, Beyond Pricing, or Wheelhouse provide market insights and optimise your pricing to attract bookings at the best rates.

Dynamic pricing systems increase your rates during busy periods when demand is high, ensuring you maximise your income. Conversely, during slower times, prices are adjusted downward to encourage more bookings and maintain occupancy.

While you don’t need to use dynamic pricing to manage your Airbnb, it can save you a significant amount of time and often delivers better results than manual pricing strategies. Hosts who switch to dynamic pricing typically see a 12% increase in bookings within the first 12 months.

How Should You Set Prices When First Listing?

When you first list your property, it’s crucial to set an attractive rate that aligns with your market and local competition. Here’s how to approach your initial pricing:

• Research the competition: Look at other Airbnb properties in your area with similar size, amenities, and location. Consider how much they charge and their booking trends.
• Start slightly below market value: For your first few months, it’s wise to set your rates slightly lower than the market average to attract more guests and build positive reviews. Once you establish credibility, you can raise your rates to match competitors.
• Consider property features: Factor in unique features such as pools, spas, pet-friendliness, or proximity to key attractions. These amenities allow you to justify higher rates.
• Set a minimum nightly rate: Make sure your pricing covers your operating costs, cleaning fees, and any additional expenses.

How Should You Adjust Prices Throughout the Year?

Airbnb pricing should never remain static. Your rates should fluctuate based on demand and market trends throughout the year. This is where dynamic pricing becomes essential. By using a dynamic pricing tool, your rates will be updated daily automatically to reflect current demand. Here’s how it works:

• Peak seasons: During high-demand periods like holidays, school breaks, or local events, dynamic pricing will increase your rates to capitalise on the surge in interest.
• Off-peak periods: During quieter times, the system will lower your prices to remain competitive and attract more bookings.
• Last-minute bookings: If you have open availability close to a date, dynamic pricing tools will reduce rates to fill those gaps with last-minute bookings.

How Does Occupancy Impact Pricing?

As your occupancy increases, your prices should rise. A dynamic pricing system will automatically increase your rates when your property becomes more booked, ensuring you capture maximum value from your remaining available nights. Conversely, if bookings are low, your prices will be adjusted to entice more guests.

How Should You Price During Off-Peak Periods?

During off-peak times, your goal should be to maintain steady bookings. Offering competitive rates through dynamic pricing helps keep your property visible and ranked higher on booking platforms. Keep in mind that although rates may be lower during these periods, maintaining a steady stream of guests helps improve your listing’s ranking and increases reviews.

How Do Website Rankings Work?

Your property’s visibility on Airbnb and other booking platforms depends heavily on your booking frequency. Think of it as a league table—the more bookings you receive, the higher your property climbs in search results. Dynamic pricing helps ensure you secure regular bookings, which improves your ranking and makes your listing more attractive to future guests.

Should You Charge Separate Cleaning Fees?

Yes, charging a separate cleaning fee ensures that each booking remains profitable, regardless of how long the guest stays. Many Airbnb hosts also charge a linen fee, especially for larger properties. These fees are usually displayed to guests as part of their total booking cost, making it clear and transparent.

How Often Should You Review Pricing?

While a dynamic pricing tool updates your rates daily, it’s essential to review your property’s performance periodically. Make sure to adjust rates manually if the market changes drastically or if you introduce new amenities. Regular reviews help you maximise profitability and maintain a competitive edge in your local market.

Conclusion

By setting the right initial price and leveraging dynamic pricing, you can maximise your Airbnb’s potential. Using real-time data to adjust rates based on market demand, occupancy, and seasonality ensures that your property stays competitive while maintaining high occupancy levels and profitability year-round. Plus, hosts who adopt dynamic pricing typically see a 12% increase in bookings within the first year, making it a valuable tool for success.