Spring is a great time to re-evaluate things: Did you set goals for the new year? Time to revisit them and make sure you’re on track. Do you want to achieve something special this season? Write it down and make a plan.
When it comes to your Airbnb business, the majority of your success hinges on your nightly rate. Set it too high and you may be missing out on bookings. Set it too low and you may be missing out on money.
If you’re not sure how to determine your ideal nightly rate, here are 3 easy steps to help you find that sweet spot.
1. Look at your occupancy rate over the past year.
This can be a challenge if you don’t consider yourself to be much of a “numbers person,” but it’s well worth the effort.
Look back over your records from the past 6-12 months: How often did you have vacancies when you didn’t want them and what was your nightly rate?
Now, if you were booked a good amount of the time and are, overall, happy with your performance, look closer. How many weekends were you unwillingly vacant that you would have preferred to have been booked?
If you had few – or even better, no – vacancies over weekends over the timeframe you’re observing, chances are you can stand to raise your rate.
2. Look at your competitors in your area.
Spying on the competition is one of the best ways to get top-shelf information.
Run a search on other vacation rentals in your neighborhood. What’s their availability like over the next 4-8 weeks? Based on their photos, listing description, and reviews, do you think they should expect to be booked more or less than what they currently are?
Now, zero in on the money: What’s their average nightly rate? Again, based on a quick overview of their place, do you think it’s worth what they charge for an average or nightly rate? Do you think guests would be willing to pay more for their place and if so, how much? What about the opposite – are they charging too much? Should they lower their rate?
As a fellow host, you’re a bit of an expert. Go ahead –judge the competition and compare your notes to your own listing’s details.
3. Run an experiment: Raise your rate just a tad.
We don’t recommend doing this with vacancies that are just around the corner. Instead, look further into the future, a good 4-8 weeks ahead.
Keep yourself focused on your project. This will take some true observation skills.
Start small here – don’t get too excited. You know the (horrifying) anecdote about the frog in the pot and how he doesn’t notice as the water gets increasingly hotter? Apply the same principle here (without harming any amphibians).
You might begin by adding a small amount, say, $5-10 a night. Alternatively, go with a percentage instead, like 1-5%. Anything above $10 or 5% might be too high to really track differences, so be mindful of your price hikes.
Give it some time and watch what happens. Keep increasing your rate, little by little, until you hit a place where you either no longer feel comfortable inching higher or you start to see a (minor) dip in bookings when you think there shouldn’t be. Go back to that last “comfortable” rate and stick with it through the high season.
Finding your ideal rate truly is a science and requires a bit of elbow grease and patience. But for those who put in the effort, the payoff is (literally) worth it.
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