Want to know How to Get Your Airbnb Pricing Right from the Start?

The great thing about today’s Internet age is that there is an abundance of information available online to help you assess your competitors and the demand for your airbnb.

Firstly, all holiday rental booking websites such as airbnb allow you to search for properties based on geographic area. They also show you a map so that you can assess the importance of specific locations upon bookings. 

You will be able to assess the number of airbnbs in the area to identify how many competitors you are up against. Don’t panic if there are a large number of competitors – this is also indicative of a healthy level of demand. The challenge is for your airbnb to offer something better or unique to be able to differentiate your home from the others currently available.

By scanning through properties on airbnb you will notice that many will have poor quality amateur photos, uninspiring descriptions and unsophisticated pricing. 

An owner says …

Even though there were more than two hundred airbnbs in the town we were looking to buy in, we were not overly concerned with the competition. We had assessed a broad range of them and found the majority of them to be poorly maintained, badly furnished and insufficiently marketed. We felt there was a huge opportunity to capture the market – and we were right!

Bookings

As well as details of the number of competing holiday rentals in an area, all of their booking data is available online too.

Unfortunately, unless you have access to a dynamic pricing system, historical data is not available, but by selecting a cross-section of different properties in the area you can build up a picture of the level of demand by looking at each of their calendars.

Bear in mind that whilst guests will book well in advance for peak periods, cheaper properties tend to fill up more rapidly. Premium priced airbnbs, on average, will tend to book out closer to peak periods. Guests also frequently book last minute so looking months ahead at calendars may not provide an accurate reflection of the level of demand. Looking at calendar bookings for each airbnb within the next 1–2 months will give a more accurate impression of demand. Bear in mind that due to seasonality bookings may vary considerably. Rather than having to wait 12 months to obtain the data to analyse the property before purchasing, a quicker way to analyse the market is to start your analysis at the beginning of peak periods. You may find that income from these peak periods is enough to provide comfort that your holiday rental is financially sustainable.

Be aware that there is a common practice amongst rental agencies that manage multiple properties where (against the rules of airbnb) they do not block out dates in calendars. The reason they do this is to encourage enquiries for unavailable properties so that they can then attempt to push the guest into another available property. This is very frustrating for the customer and many consider it to be an unethical way of doing business. Try to avoid these properties when doing your analysis.

Also bear in mind that viewing the pricing of vacant airbnbs can skew your perspective on the right price to charge. If a property is consistently empty it is likely that it is overpriced (presuming there is adequate demand in the area and that other local properties are busy). Ideally look for busy properties (calendars 70% or more full within the next month) that have a couple of gaps in their calendars – then identify the prices they are charging for those gaps.

Beware of properties that appear to be fully booked. They may have blocked out dates for their own personal use or they may be significantly underpriced. A tell-tale sign of this is that they are booked solid for months ahead. Of course they could also have a superstar airbnb which is a guest favourite or superhost – and this will be apparent from the quality of the listing and the property itself (but these kinds of listings are few and far between).

Pricing 

The great thing about the online world is that every piece of pricing for your competitors is on display for you to access – as is their availability calendar.

This information can be used to provide a simple pricing guideline prior to listing your property for rental. The key variables for pricing relate to the number of guests you can host, quality of the accommodation and distance to the key attractions. Try to pick out those properties that have the highest amount of bookings in their calendar. 

Example:

Be sure to include the platform fees and any cleaning fees in your calculations as you should base your numbers on the total booking amount that the guest pays.

It’s important to note that many professional airbnb hosts have systems that will combine all the fees into one amount so you won’t be able to see the nightly rate.

Resist the temptation to price yourself below the competition to capture more customers if you believe your property is of higher quality. This can lead to your airbnb being viewed as a budget option, when many customers want to rent higher quality airbnbs in your area. 

Good operators will have up-to-date pricing customised for different seasons and special events throughout the year. This can give you a good indication of what you can set your prices at. Take an average of your estimated nightly pricing and multiply it by your estimated nights per year (that you’ve obtained from competitors’ calendar data) and you should have a rough estimate of potential turnover.

There are also websites such as AirDNA, Pricelabs and Beyond Pricing that can provide information on pricing and demand in specific areas. 

Quality

Be sure to stay at two to three of the most popular (and highest rated) airbnbs you can find. There is very little to be learned from poor quality operators.

Take note of their performance at every stage of your experience: from booking right through to after your visit. Here are some of the key factors to assess:

1. Was their airbnb easy to find online?
2. Were they listed on multiple booking websites?
3. Did they have their own website with direct booking facility?
4. Were the property description and photos of good quality?
5. Were they fast to respond to your enquiry? 
6. Was their calendar up-to-date?
7. Was the price as advertised?
8. Was the booking/payment process easy?
9. Did they provide convenient payment options?
10. Did they send you good quality information immediately post-payment?
11. Were you able to get to the property easily?
12. Was the information regarding its location accurate?
13. Was the property and its facilities as you expected?
14. Was the property clean and well maintained?
15. Were the beds comfortable?
16. Were there adequate instructions for all the facilities?
17. Were there clear rules/guidelines provided as to your stay and departure?
18. Did they send you a survey after your stay?
19. Did they provide an incentive to return?

Be sure to take photos of properties you stay at so you can remember the good and bad aspects when you return home. 

A little bit of analysis up-front can ensure that you price your airbnb at the optimum level to get bookings coming through the door quickly.