Best Airbnb Pricing: Get My Simple Yet Powerful Strategy (2024)

As a host, one of the hardest things you’ll do is determine your Airbnb pricing.

That’s because determining your nightly rate is tricky, time-consuming, and filled with uncertainty.

At the same time, your pricing on Airbnb is the single biggest factor impacting your income.

When it comes to determining your nightly rate, you have three options:

1. Manually research and calculate your nightly rate;
2. Use an automated pricing tool; or
3. Create your own hybrid pricing strategy

In this post, I’ll walk you through all three options and the EXACT pricing strategy I used to gross $85,000+ my first year Airbnb hosting. Let’s jump in.

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Manually Researching and Calculating Your Airbnb Pricing

You could manually determine your nightly rate based on your own competitive research. But this strategy has two major downsides:

1. It’s unreasonably time-consuming; and
2. You’re working with limited information

To manually calculate your pricing on Airbnb, you’ll start by researching the nightly rate of comparable properties.

So, you have to decide what counts as ‘comparable’ on location, amenities, property type, number of bedrooms, maximum occupancy, and so on.

Once you decide what fits the bill, you might scroll through pages and pages of Airbnb listings to find those properties.

Doing so every time you want to update your nightly rate is unreasonably time-consuming.

And, you’re working with limited information.

When it comes to maximizing revenue on Airbnb, your occupancy rate and nightly rate are everything.

But, no matter how much time you spend researching, you won’t find that information on your competitors without a third-party tool.

Learn more about why you shouldn’t manually calculate your Airbnb pricing.

After spending hours trying to manually calculate your pricing on Airbnb, you might be ready to give up and let an automated pricing tool do all the work.

When it comes to using automated pricing tools, you have two choices. You can use:

Unfortunately, in my experience, no automated pricing tool works well enough for you to simply set it and forget it.

With third-party pricing tools, you’ll get your absolute highest nightly rate. But that comes at the cost of not getting as many bookings as you could. And because these tools often don’t work well, you might end up wasting your time, feeling frustrated, and ultimately losing out on a meaningful amount of revenue.

With Airbnb Smart Pricing, your nightly rate might be so low that you never reach your full revenue potential. And since VRBO doesn’t have its own automated pricing tool, you’ll have to manually update your VRBO pricing.

That’s where creating your own hybrid pricing strategy comes in.

Pro tip: Pricing is just one of the 50+ ways your listing can be optimized today to start earning you more revenue today!

Creating Your Own Hybrid Pricing Strategy

With your own hybrid pricing strategy, you can lean into the strengths of all of the approaches above while minimizing their weaknesses.

And, designing your own hybrid strategy is surprisingly simple.

Here are the three steps I take to determine my pricing on Airbnb:

1. I open up my calendar 1-2 months at a time, typically 3-4 months out. Since I have a lot of time to get these dates booked, I set them at my highest price
   • To determine what my highest price is, I use the AirDNA forecasting tool. In my experience, this third-party tool optimizes for nightly rate. This makes it perfect for determining a high nightly rate that still has a chance of getting booked
     • Note: AirDNA itself is not an automated pricing tool. It’s a forecasting tool that allows you to see your overall projected revenue, occupancy rate, and suggested nightly rate. You can also see competitive data, seasonality, and many other data points that can inform your pricing strategy
   • By manually plugging in the nightly rates I see in AirDNA, I maintain much more control over my listing than if I were using an automated tool. If any rate seems too high or too low, I adjust it to exactly what I think it should be. (And that number doesn’t change unless I change it!)
     • Manually updating my nightly rates on Airbnb and VRBO takes ~10 minutes
2. I monitor my pricing
   • I’ll check back with AirDNA every two weeks or so. Tools like AirDNA are dynamic, so they regularly adjust their rates based on many factors
   • If the AirDNA suggested nightly rates have changed meaningfully, I’ll update my rates to reflect that
   • Then, depending on how quickly dates are getting booked, I either increase or decrease the nightly rate further (which is something you DON’T have the option to do with an automated pricing tool)
     • If my Airbnb isn’t getting booked:
       • For any unbooked nights in the next month, I decrease the nightly rate a bit (maybe about -10% or so)
       • For unbooked nights within the next two weeks, I decrease my rate a little more (to maybe about -15% total)
       • And I drop the rate even further for unbooked nights just a few days out (to about -20% total)
     • If my Airbnb is getting booked, I’ll consider using a more aggressive AirDNA forecast (AirDNA gives you three different options to choose from!)

That’s it! That’s my Airbnb pricing strategy to maximize revenue.

This hybrid strategy really doesn’t take more than half an hour each month. And it puts me in way more control than using an automated pricing tool.

Takeaway

As a host, one of the hardest things you’ll do is determine your Airbnb pricing.

But just because it’s hard doesn’t mean you should overlook its importance. Your pricing on Airbnb is the single biggest factor impacting your income.

Keep a close eye on your pricing when you’re just starting out.

Spending just 30 minutes a month on implementing your own hybrid pricing strategy could save you tens of thousands of dollars annually.

Pro tip: Pricing is just one of the 50+ ways your listing can be optimized today to start earning you more revenue today!

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Do you have any questions about your Airbnb pricing strategy? Let’s chat in the comments.

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