Airbnb Pricing Guide: How to Determine Airbnb Prices

Figuring out how to determine Airbnb prices isn't just about looking at similar listings and matching their rates — it also involves having a proper understanding of your local market to know when you should update your prices.

After all, your Airbnb pricing strategy can make the difference between a constantly booked property with steady occupancy rates that brings in steady income and one that sits empty for weeks. While it might seem overwhelming at first, understanding the key factors that influence pricing will help you make informed decisions that benefit both you and your guests.

How to Change the Price of Airbnb Listings

Before we explore Airbnb pricing strategies, let's cover the basics of setting up your pricing on Airbnb. Follow these steps to update your default pricing:

• Step 1: Go to your listings on airbnb.com.au
• Step 2: Click on pricing at the top of the page. If you have more than one listing, be sure to select the correct listing from the dropdown.
• Step 3: Click on edit and enter your nightly pricing.
• Step 4: To update your cleaning fees, go to standard fees and charges.
• Step 5: Click edit next to the cleaning fee.
• Step 6: Enter your desired cleaning fee and click save.

Remember to disclose any other fees as well. If you have a pet-friendly accommodation, be sure to note an additional pet cleaning fee upfront. The same goes for any additional late check-out or early check-in fees.

Airbnb Pricing Guide: How to Determine Airbnb Prices

It's no secret that the short-term rental market offers higher rental income than traditional long-term rentals. With Airbnb, you can take advantage of price surges during holidays, long weekends, and festivals. While it might take a bit more effort, the potential for higher earnings makes it worthwhile. Plus, you can charge cleaning fees as a standard extra, helping cover your maintenance costs.

To really succeed, you need a solid Airbnb pricing strategy that helps you stay competitive and profitable. Your strategy needs to balance attracting guests with making sure you're earning enough to cover your costs and make a good return. Let's look at the key elements that will help you create a pricing strategy that works for your property.

1. Know Your Market

Before you jump right into pricing your property, it's important to know where it sits in the local market. Take time to research similar properties in your area, but look beyond just the nightly rate. Consider what makes your property unique when you're figuring out how to price your Airbnb — perhaps it's your location, your interior design, or the amenities you offer.

Looking at similar properties in your immediate area can give you an accurate picture of local Airbnb pricing. Creating a comparison table of nearby properties can help you visualise where your property fits in the market. Make sure to include details like nightly rates, cleaning fees, and any extra charges to get a complete picture.

2. Factor in the Costs of Maintaining Your Airbnb

As an Airbnb host, you need a clear understanding of the daily costs to keep your property running before finalising your Airbnb pricing strategy. An essential part of figuring out how to determine Airbnb prices is setting up your property for long-term success. This helps ensure you're not just filling your property, but actually making a profit.

Consider any mortgage payments, utilities, insurance, cleaning fees, and platform commissions you might have. Don't forget to factor in a buffer for maintenance and unexpected expenses, such as guest damage.

Hometime tip: To protect against property damage, many hosts also choose to charge a security deposit. According to Airbnb, you can set this anywhere between US$100 - US$5,000 for the duration of the stay. A good rule of thumb is to charge the equivalent of one night's stay.

3. Use Dynamic Prices for Your Airbnb Pricing Strategy

Today's successful Airbnb hosts use dynamic pricing strategies that respond to market conditions — this means adjusting your rates based on seasonality, length of stay, and lead time, instead of having a flat rate. Start by mapping out your area's high and low seasons. Consider factors like:

• School holiday periods
• Major local events and festivals
• Business travel patterns
• Weather conditions that might affect tourism

During peak periods, you can often charge premium rates as demand increases. However, during quieter periods, you might need to adjust your prices down to maintain steady bookings or even consider offering discounts for longer stays to avoid low occupancy rates. The key is finding the right balance that keeps your property competitive while maximising your income.

There are also various tools that can help you automate your Airbnb pricing — Airbnb's Smart Pricing, for one, is built into the platform. But if you're finding that Airbnb's Smart Pricing is either too high or too low, you can also consider third-party tools or working with an Airbnb property manager. Airbnb managers have experience managing multiple properties and can provide valuable insights into cost management and pricing strategies, including the use of dynamic pricing algorithms to determine current market rates and adjust the algorithm accordingly.

Check out Hometime's guide on how to determine Airbnb prices to follow seasonal trends in your local market:

Common Airbnb Pricing Mistakes

We often see property owners make these same pricing mistakes that can significantly impact their success:

1. Copying competitor prices without understanding their offering can be dangerous – your property might have unique features or costs that justify different pricing.
2. Many hosts also forget to adjust prices for special events, potentially missing out on significant revenue opportunities during high-demand periods.
3. Similarly, keeping prices too high during low seasons instead of adapting to market conditions can result in extended vacant periods.
4. Another common error is not considering running costs when setting rates. This can lead to the illusion of profitability when you're actually barely breaking even. 

These mistakes often stem from a lack of market understanding or the desire to maintain consistent pricing year-round. However, the short-term rental market is dynamic, and your pricing strategy needs to reflect this reality to maximise your property's potential.

Why Professional Airbnb Management Makes a Difference

While managing your own pricing strategy is possible, many property owners find that working with a professional property manager delivers better results. Property managers like Hometime bring extensive market knowledge and sophisticated pricing tools to help optimise your property's performance. They understand local market dynamics, have access to comprehensive booking data, and can adjust your pricing strategy in real-time to maximise your returns.

Aside from helping you figure out how to determine Airbnb prices and create an effective Airbnb pricing strategy, Hometime also offers the following services:

• Property onboarding:
  We’ll help you set up your short-term rental as quickly as we can so you can start getting bookings ASAP.
• Listing optimisation:
  Our team constantly works on improving your listing through great content showcasing the best of the property with high-quality professional photos, and creating detailed guides for your guests. This includes property styling and photography to make your Airbnb stand out and to maximise its appeal.
• Airbnb cleaning services:
  We’ll find the best cleaners to look after your home, whether it’s for regular cleans, deep cleans ready for peak season, or even restocking essentials. We use the built-in cleaning fee from the booking, so there’ll be no need to pay for it out of pocket.
  
• Guest communication and management:
  We go the extra mile to ensure your guests enjoy every part of their stay, from making the booking, checking in, checking out, and everything in between. This includes taking care of maintenance issues quickly, providing alternatives for late-night arrivals, and even meeting them in person when needed!
  
• Property maintenance:
  Hometime’s local Airbnb experts will sort out all your maintenance needs to make both you and your guests happy. We’ll also do our best to get you the best rates for services in the area due to our close relationships with local businesses.