Smart Pricing

At a first glance, smart pricing seemed like the best option for our brand new listing. Someone is going to analyze the market for us and price it just right to minimize our vacancy rating? Sounds fabulous! We check that off the list and continue on with writing up our listing and adding our photos. Phew, all finished – let’s preview the listing.

Hmm, our pricing seems low.  After doing our research and analyzing the competition, we came up with what pricing we thought would be appropriate, yet competitive (since this is a business after all, right?). Our pricing was, on average, $30 more a night than what smart pricing suggested. Of course, you question whether the lower suggested price point will allow you to really maximize your occupancy rate. Because we were confident in our analysis of nearby competition, we decided to follow our instincts and price according to what we found appropriate. What have we found? More money, combined with very high occupancy rates. In the 3 months that we have been renting on Airbnb, our occupancy rates were, 75%, 70%, and 71%, respectively. According to AllTheRooms.Analytics, a high occupancy rate is anything over 65%, and top performers max out at 75%. So following your gut does pay off, when combined with attention to detail that is.

Thinking Ahead

In order to avoid smart pricing, you have to be a bit strategic and think through seasonality pricing, length of stay discounts, and extra charges.

What are you comfortable charging during weekdays versus peak weekends? For us, we priced Friday and Saturday nights $10 higher than our weeknights. Not a huge increase, meaning it will not scare away potential renters, but results in a little extra cash flow. Security deposit? Absolutely, this was a must for us! Luckily, we have not had to put any security deposit claims in yet (knock on wood!). Length of stay discounts are great for encouraging guests to stay a week or longer. For this, you have to determine, how much is it worth to you to not have to worry about additional turnovers? Also, how much is it worth to have those nights booked versus potentially vacant? Find what you feel comfortable with and run with it! How about minimum stay? How often are you comfortable turning over your rental? We knew we did not want to have to handle everything that goes along with a daily new renter, so we went with a 2 night minimum. Considering that we only have 2 days off of work a week, 3 nights seemed a bit excessive.

Voila! You have worked around smart pricing and increased your profit margins!


About the authors: Christine & John are five star hosts located in St. Augustine, Florida. To learn more about them, check out their Airbnb listing here: