Airbnb Pricing Strategy: How to Manage Your Rates for Maximum Profit

A good pricing strategy on Airbnb is the key to success in the business. Before a potential client books your Airbnb, one of the main factors that they take into account is the price.

With an Airbnb business, you have to make sure that your price attracts customers without devaluing your investment properties. Therefore, choosing the right price point is essential to ensure success.

Airbnb pricing influences the traction your business receives. It also affects your ratings and the overall customer experience. But before you set your rate, here are some things to consider when pricing your business:

Things to consider when pricing an Airbnb

A pricing strategy Airbnb requires more than just choosing an attractive rate. Although smart pricing tools specifically address this, an Airbnb host still has to consider other elements involved. Some of these factors include:

Property Type

Your property is the foundation of your business, so it plays a huge role in Airbnb’s pricing. Airbnb is open to several types of property listings, so you have to be vigilant to make sure your price aligns with the type of property you own.

Let’s say you offer a shared room or apartment. A full fee strategy is helpful in making a stable profit. A maximum nightly rate strategy is best for luxury properties or experiences that encourage potential customers to pay more.

Location of the property

After the type of property, we must take into account the location. The standard price of the properties can vary according to the location and the demand of the area.

In some cases, location affects prices due to its uniqueness. If the property is on a remote island, people are likely to stay longer, so higher nightly rates work better to cater for these.

Local Competitors

When developing a pricing strategy, you must remember that your customer could be your competitor’s customer next time.

Guests often compare properties before and after booking. If you want them to gravitate towards your Airbnb, offer them a suitable and reasonable offer from the customer’s point of view.

Look at the pricing strategies that nearby competitors are using and stick to them. At the same time, you must offer enough to align with the value of your property.

Additional services

When guests pay a high price for your property, they expect you to offer them more. Let’s say you only have a bed and a bathroom. Potential clients will not be willing to pay for the property if it is the same price as a larger room with buffet breakfast.

When choosing your pricing strategy, consider what you offer your audience. Will there be free meals or a buffet table? Do they have unlimited access to the pool? Additional services influence the length of your stay and help you determine which strategy is best.

Target Market

Finally, your pricing strategy directly affects your target audience. If you want to market your Airbnb to backpackers, a maximum nightly rate strategy can reduce your profits due to low bookings.

However, if you apply it by heading to family vacations, business is likely to hold steady. If your audience has lower budgets or prefers shorter stays, a maximum occupancy rate allows you to maintain engagement and revenue.

Step-by-step guide to optimum pricing strategy

Once you have clarified the aspects to take into account, here is a guide on how to start framing your pricing strategy on Airbnb:

1. Start with a market study.

First of all, research similar Airbnb properties in your chosen area. Find out which dates are usually booked and at what prices. This will give you an idea of how competitors adjust seasonal and regular prices.

However, if you apply it by heading to family vacations, business is likely to hold steady. If your audience has lower budgets or prefers shorter stays, a maximum occupancy rate allows you to maintain engagement and revenue.

2. Consider your options.

Break down your list to the most appropriate pricing strategy for your business, taking into account each of the factors that affect pricing. Keep in mind that it may vary depending on the season or the target audience.

3. Ask for an honest opinion.

As an Airbnb business, reviews are critical to powering your listing. Positive reviews make your ad appear higher in search results.

Newer listings can gather an audience by offering attractive deals to boot until they have a suitable response backing them through the busy season.

4. Decide on a price.

Your Airbnb price may be different depending on the season. The most money is made during peak seasons, depending on the market and the destination.

Remember to be careful when setting your rates. Offer your property for a price that is good enough to maintain profitability while attracting guests.

When pricing a night, remember to include more than just the cost of your stay. It must be enough to cover expenses such as maintenance, utilities, taxes and, if applicable, the monthly mortgage.

Best Airbnb Pricing Techniques

There are several strategies for pricing a vacation rental business on Airbnb. Each of them is effective when applied at the right times. Here are some recommendations:

When pricing a night, remember to include more than just the cost of your stay. It must be enough to cover expenses such as maintenance, utilities, taxes and, if applicable, your monthly mortgage.

Maximum Fill Rate

This strategy aims to ensure maximum occupancy by providing the best on-site experience. Therefore, you must offer more value than the competitors in your environment. Nightly rates will be low, but this strategy can lead to a stable income.

Max Nightly Rate Strategy

Rate strategy is best for a premium Airbnb located in a prime location. The ideal is to charge the maximum rate per night, in addition to other rates to obtain a greater income from each reservation.

Dynamic Nightly Rate Strategy

Unlike the Maximum Nightly Rate, the Dynamic Nightly Rate Strategy requires you to adjust your nightly rates on a regular basis to compete with others. The main objective is to collect as many reservations as possible.

Long-term rental agreement Long-term

Vacation rentals usually offer a monthly rate. This strategy puts less effort into ad management, and you may earn less per night. However it guarantees continuous and stable income generation.

Airbnb Balanced Pricing Strategy

This Airbnb pricing strategy refers to combining several pricing strategies to maximise your business. It favours a dynamic approach where its pricing strategy changes with the season, demand, and other important factors.

How to Manage Your Airbnb Pricing Strategy


You are responsible for researching, deciding and monitoring activity related to your chosen pricing strategy. It requires more time and effort, since you work on it yourself.

Although it may not be practical for an Airbnb host with a busy schedule, it allows you to take more care and thought in planning your strategies.

Airbnb Smart Pricing Tool

Airbnb offers a service where it collects data for you and follows up with price suggestions called Airbnb smart pricing.

However, you will have to do manual comparisons to determine which price offers you the most benefits, maximum revenue and the most value.

Automation Software

The use of automation tools is a popular option for many vacation rental operators. The software works similar to smart pricing in that it generates accurate price suggestions based on your vacation rental business.

Other software, such as Myror, may offer advanced and custom options. These include in the calculations additional costs such as a major cleaning fee, the price per guest and the security deposit.

Specialist airbnb pricing websites

Sites such as alltherooms and airdna can provide in-depth data allowing your to price optimally compared to the market. These sites have data on occupancy rates, Revenue, broken down by property type and location.

Although these tools provide great data on property types and locations, they still require some manual input to make provision for variables such as decor, space, facilities offered and so on.

The importance of a pricing strategy for new Airbnb Rental Businesses

An Airbnb can bring you big profits, but it can also cause big losses if calculations are not carried out effectively. Finding the best Airbnb pricing strategy for your business saves you a lot of risk, especially when your listing is fairly new and your experience level is low.

What to do now

Understanding your business is critical to knowing how best to manage your Airbnb listing. If you are an owner with little experience in price management, a few tools or the help of a professional will go a long way.

You have to think a lot about the rental strategy because it influences the success rate of your business. So take your time to assess your property, expenses, target market, and all the other factors surrounding it before choosing your strategy route.

Our recommendation

To start with you are probably best to use alltherooms as they offer a free option and their paid options are relatively inexpensive, especially considering the alternatives.

However, you should use a variety of automated and manual strategies to hit the pricing sweet spot.

All of these features make finding the best Airbnb pricing strategy much faster. So if you’re looking for ease of access, using pricing tools is the way to go!

And of course if you need help with any of this be sure to reach out to us!

What strategies do you use to find the optimal pricing strategy? Are there any you think we have missed out?

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