What Should You Charge on Airbnb? A New Tool Helps You Set the Best Price
Do you struggle to figure out what to charge when you list your room or home on Airbnb? It can be hard to stay on top of the going rate in your town for a night in your apartment, spare room or igloo. And when a convention or festival comes to town, or the local college has its graduation, should you charge more?
Airbnb has a new tool to help you solve all of these hosting dilemmas -- and make more money. Just last week, the company rolled out a new feature called “Price Tips” that helps hosts optimize their pricing to attract more bookings and make the biggest profits from their listings.
How Does Price Tips Work?
Airbnb says Price Tips will “take advantage of strong interest in visiting your area” by using a mathematical model to suggest prices.
Price Tips analyzes demand for Airbnb properties (which, not surprisingly, typically peaks when large events are in town), and recommends prices for hosts to charge. For example, an Austin rental price would skyrocket during SXSW and also rise considerably for the City Limits Festival, but be more moderately priced on, say, a random Tuesday. Price Tips’ algorithm is similar to “surge pricing,” a model used by Uber to increase prices during peak times when demand is high, like when the bars close on a Saturday night.
The predictions are based on hundreds of different factors, like the type of listing, availability, location, price and how far in advance of a specific date people view your booking, according to Airbnb's vice president of engineering, Mike Curtis. The system recommends prices based on demand for properties as well as travel trends.
Use Price Tips to Find the Perfect Price Point
Until now, you’ve had to make your best guess as to what people might pay to stay in your home. Price Tips helps you figure out how to raise your rates on high-demand nights and lower rates on slower nights so people are more likely to make a booking.
When you use the tool, you’ll see a calendar of dates along with the prices you’ve listed for each date. If Airbnb thinks you’ve chosen a good price, the date will appear in green, but if the company thinks the number is too high, it will be red. A slider helps you adjust your prices until you hit the “sweet spot” that Airbnb thinks is just right. The company is so convinced they can hit the perfect price, they claim the odds of a booking will quadruple as long as you choose a price within 5% of their suggested rate.
By maximizing rental prices and the number of bookings, you’ll make more money. Of course, Airbnb, which earns a 9-15% commission on each rental, also cashes in.
How Can You Maximize Your Profit?
You've spruced up the spare room and you're all ready to rent it out and meet travelers. How can you maximize your Airbnb income and make it a good experience for host and guest alike? Use these tips to make sure everyone knows just what to expect and to make sure your money-making endeavor doesn't turn into a disaster.
Check Price Tips Daily
To make the most from your rental, it's important to check in with Price Tips regularly and adjust your prices as often as necessary. It's what hotels do, and if you're treating your property like a money-making enterprise, it makes sense to take some time each day to make sure you're making as much as you can.
Price Tips updates its predictions each day as it monitors other listings, so check in to make sure yours are still in line with the sweet spot.
Get Good Reviews
Make your home desirable. This means posting attractive (but honest) photos and a good description of what you have to offer. Be friendly and personable when interacting with guests before and during their stays, and communicate with them about what to expect. Make sure everything is clean and items such as hand soap and toilet paper are fully stocked.
The better your reviews are, the more likely you are to get more bookings, and the higher prices you can charge.
Don't Get Ripped Off
Don't throw away your profits by becoming a victim of theft, fraud or property damage. Before you invite strangers into your home, be sure to take some basic precautions such as putting valuables away, including family heirlooms, jewelry, laptops and even your personal documents. Don't fall victim to identity theft if someone comes across the cabinet or hard drive where you keep all your bank records and personal files.
Airbnb offers a “$1,000,000 Host Guarantee” to cover property damage that may occur beyond normal wear and tear (with certain exclusions, of course). Of course, they also recommend you get actual homeowners or renters insurance as well to make sure you’re fully protected.
Your Turn: Have you used Price Tips to help choose a rate for your Airbnb rental? What do you think so far?
Kristen Pope is a freelance writer and editor in Jackson Hole, Wyoming.