Automate Your Pricing Strategy
Create an effective pricing strategy to elevate your hosting game
Why do I need a pricing strategy?
Before we get into setting up a solid pricing strategy, let’s talk briefly about why you need one in the first place. No matter your location, or type of listing, demand for your listing will fluctuate throughout the year. Maybe the weather is particularly nice during one season, or there are many events in your city during a given time period. These factors will drive demand up, meaning that more guests will want to stay at your place.
Your pricing throughout the year should follow these trends. It should rise when demand is high, and fall when demand is low to help you secure bookings in a time period where there are less guests to go around. But how can you know when you should be changing your prices? This is a tough problem to solve and one that requires a lot of data. Luckily there are a few options available to you.
What are my options?
If you’re an Airbnb host, you can use Airbnb’s pricing algorithm. Airbnb has all the data about what demand looks like in your area based on other bookings being made and the total number of competitors (other Airbnb hosts) you have in the area. You do have some control over the price of your listing while using this algorithm. Hosts can set an upper and lower limit on the per night rate of their listing. Once you do, the tool will take care of the rest. However, one thing to keep in mind is that Airbnb’s dynamic pricing is notorious for pricing low. This makes sense since the company is trying to maximize bookings.
There are also third-party pricing tools that can optimize your listing’s pricing for profit and automate the pricing the same way the Airbnb algorithm does. Examples of these services are BeyondPricing and Everbooked.
This is an excerpt from our original white paper series: Hands-off Hosting, which was distributed in PDF format. It has now been adapted into a series of posts on this blog which you can find here. Another white paper series we published is “Listing Site Independence, A Cheat Sheet” which has also been adapted to our blog. You can find that series here.