Ace Your Airbnb Pricing Strategy With Mashvisor’s New Tool
Acing your Airbnb pricing strategy is a must for the success of your short-term rental business, and we’ll show you how Mashvisor can help.
The right pricing of an Airbnb property helps it appear high in guest searches on the platform and get more bookings. Also, it can boost your occupancy rate, rental income, cash flow, and return on investment. However, it requires a lot of hard work to strike the right balance between daily rates and all other metrics.
In this article, we’ll cover everything that hosts need to know about how to create the best pricing strategy for their vacation rental. We start from the factors they need to consider and the steps they need to take, all the way to how to automate the process for optimal results.
We’ll show you how the Mashvisor Dynamic Pricing tool-the newest addition to the arsenal of tools the platform provides to real estate investors-can help.
7 Factors That Affect Your Airbnb Pricing Strategy
When you set up the pricing strategy for your Airbnb investment property, there are a few factors to consider. These include:
1. Market
Each market comes with its own nightly pricing rates. Airbnb hosts in hot tourist destinations and popular business hubs can afford to set higher rates than those in markets with less demand.
2. Property Type and Size
Different short-term rental types see different average daily rates. For example, if you rent out an entire house on the beach, you can charge more than if you rent out a small condo elsewhere.
3. Number of Guests
Properties that can comfortably fit more guests can charge higher prices. If your vacation rental caters to group travelers, you can ask for more than other rentals in the area.
4. Amenities, Extras, and Experience
The more additional features, such as swimming pools, hot tubs, and verandas, that come with your Airbnb, the higher you can set your nightly rates. Moreover, if you provide an experience in addition to space, you can further boost your rates and revenue.
5. Local Supply and Demand
You should keep an eye on the changes in supply and demand in the market and adjust your Airbnb pricing strategy accordingly. If the number of visitors increases, you can bring up your daily rates. If a new Airbnb shows up next door, you need to lower your rate to remain competitive.
6. Seasonality
Most locations experience changes in seasonal demand. Beach resorts attract more Airbnb guests in the summer, while skiing destinations do so in the winter. You must consider the seasonality factor when setting up a dynamic pricing strategy.
7. Special Occasions
You can afford to raise your nightly rates around holidays or special events, such as conferences and festivals, that bring more visitors to your city.
6 Steps to Set Up Your Pricing Strategy on Airbnb
In order to generate the best possible results when you buy a vacation rental property, it’s important to develop an elaborate pricing strategy. It is not enough to set up a single rate and maintain it fixed if you want to boost occupancy and maximize revenue.
Here are the six steps that you need to take to ace the pricing strategy of your Airbnb property:
1. Study and Analyze the Local Short Term Rental Market
The first step is to conduct detailed Airbnb market research where you look at the supply (existing Airbnb listings) and demand (number and type of visitors). You need to understand how many short-term rentals there are in your area and how much guests are willing to pay for them per night. Find out how occupied or vacant they are.
You can start your research on the Airbnb platform by searching for spaces around you and what rates per night they ask for.
However, you’d need to resort to additional Airbnb data sources to know the occupancy rate, monthly income, and ROI that hosts generate with their pricing. The said information is not available on Airbnb, so you can try to connect with local investors, hosts, or even real estate agents and property managers.
2. Factor In Your Specific Property
The second step is to analyze and consider your specific property. As mentioned above, the type and size of the property and the number of guests that it can host are major determinants of the pricing strategy.
So, take into consideration all the main characteristics of your Airbnb rental, like its type, square footage, number of bedrooms and bathrooms, amenities, and number of guests to host. You should also check out the local regulations, as some cities impose an upper limit on the number of adult guests that can stay in a property per night.
3. Find Airbnb Rental Comps
The next step in the rental market analysis required for your Airbnb pricing strategy is to locate active listings similar to your own property. They are known as rental comps (from comparables). When searching for them, consider all your property’s main features that you discovered in the previous step.
To find rental comps, you can use Airbnb, as well as additional sources. See what daily rates they charge and check how they change for as long as their booking calendar shows. Take note of when the nightly rate goes up and when it goes down to reflect adjustments in seasonal demand.
Related: Rental Comps: What Are They and Where Can I Find Them?
4. Set Up Your Base, Minimum, and Maximum Daily Prices
After you’ve gathered all the Airbnb data analytics above, it’s time to start working on the actual strategy for pricing your Airbnb. Use your competitor analysis to set up a base daily rate for your property. It is the default price and should reflect the average daily rates in your market. Make sure it’s enough to cover your operating expenses and bring a positive cash flow.
Then, you should also decide on a minimum daily rate or the smallest price per night that will allow you to keep generating a positive cash flow. Below such a point, it doesn’t make sense to rent out your property. It is the daily rate for the low season.
Last, set up the maximum nightly rate that you can possibly ask for your property. It shouldn’t exceed the most expensive comparable Airbnb listing in your market. That’s the rate for the high season.
5. Continue Monitoring the Market and Your Performance
To really ace your Airbnb pricing strategy, it does not suffice to set up the optimal rates and forget about it. You need to continuously check and analyze the Airbnb market so that you can reflect any changes in the pricing of your short-term rental.
It means that you should check out the competition every couple of days to see if there are any new players in the market and existing ones adjusting their rates. You also need to be up to date with local news that may affect supply or demand.
In addition, you should analyze the performance of your property to ensure excellent ongoing income, positive cash flow, good cap rate, and strong cash on cash return. If your Airbnb is not performing well, you might need to change your pricing strategy.
Related: Real Estate Investing for Beginners-How to Calculate Cap Rate
6. Automate Your Airbnb Pricing Strategy
As a last step in setting up a comprehensive pricing strategy, you should look into ways to automate the process. Alternatively, you’ll need to spend all your time on the Airbnb platform instead of enjoying your real estate income.
This is where the Mashvisor Dynamic Pricing tool comes into play.
The Mashvisor Dynamic Pricing Airbnb Tool
Optimizing the pricing strategy of your Airbnb property requires a lot of data collection, analysis, and calculations. However, Airbnb hosts are constantly on the lookout for ways to turn their revenue into passive income. Mashvisor has recently launched a new tool to help with this: the Dynamic Pricing tool.
What Is Mashvisor Dynamic Pricing?
The Mashvisor Dynamic Pricing tool allows investors and hosts to ace their Airbnb pricing strategy while putting it on autopilot. The tool accesses all Airbnb listings in any US market and their data. Using AI-powered algorithms, it can calculate the best nightly rate of any residential property for each day when it’s available for rent.
The Mashvisor proprietary algorithm aims to maximize the monthly rental income rather than the Airbnb occupancy rate. It sets our tool apart from the rest of our competitors, which focus more on occupancy and less on revenue.
What Does the Mashvisor Airbnb Pricing Tool Do?
The Dynamic Pricing tool provided by the Mashvisor real estate investing platform does two main things for Airbnb hosts and their pricing strategy.
First, the tool allows investors to conduct an analysis of the local Airbnb market and their competitors to see what rates they charge and what results it brings to them. It eliminates the need to use multiple tools and several data sources when analyzing the area.
Moreover, all data available on Mashvisor comes directly from the Airbnb website and reflects the performance of active listings.
So, investors can use the analysis to set up their daily rates.
Second, Airbnb hosts can allow the Mashvisor Airbnb pricing tool to take over the process of dynamic pricing without the need for manual reviews and approvals. In this way, you can fully automate your pricing strategy while yielding the best results based on reliable data and analysis of rental comps.
How Do You Get Started With the Mashvisor New Tool?
Setting up your Airbnb pricing strategy with the Mashvisor Dynamic Pricing tool is easy. All you need to do is to connect your Airbnb listings to your Mashvisor account once. You can import multiple listings so that you manage everything from a single account, with no need to visit multiple platforms.
Next, you should analyze the local area to see what daily rates your competitors are charging. It will help you decide on a base price, minimum price, and maximum price for your own Airbnb rental.
Finally, you can switch on the automated option to allow the Mashvisor tool to adjust your nightly pricing based on local market trends. All changes will be directly applied to your Airbnb listing, with no need for you to transfer anything to the Airbnb platform.
Alternatively, if you prefer to retain complete control over your Airbnb pricing strategy, you can continue using the Mashvisor Dynamic Pricing tool for the analysis part. Then, you can decide on the daily rates on your own. It will again save you a lot of time from conducting manual research and dealing with multiple tools.
To start using the Mashvisor Dynamic Pricing tool for optimizing your pricing strategy on Airbnb, sign up for a 7-day free trial now.
3 Mashvisor Dynamic Pricing Tool Alternatives
Mashvisor Dynamic Pricing is not the only option for automating your Airbnb pricing strategy. However, it is easily the best one.
Let’s take a look at three of the most popular alternative Airbnb pricing tools and how they perform:
1. Airbnb Smart Pricing
The Airbnb platform provides its own tool to help hosts make their pricing strategy dynamic. The best thing about Airbnb Smart Pricing is that it is free to use (btw, Mashvisor Dynamic Pricing can also be used for free without access to syncing). Moreover, it doesn’t require any integration with other tools.
However, on the flip side, the Airbnb algorithm tends to prioritize occupancy over revenue. Many hosts who use the said option complain that it will basically lower the rate until someone books the property. However, it does not guarantee the best final results for investors who want to maximize income and ROI, not occupancy.
2. AirDNA Smart Rates
AirDNA Smart Rates is another popular Airbnb pricing tool that helps hosts automate their strategies. It uses Airbnb data to suggest the most appropriate daily rates for short term rentals across the US.
The main drawback of AirDNA’s tool is that it requires using the Futurestay software to push the proposed daily rates to the Airbnb platform, while the Mashvisor Dynamic Pricing tool integrates directly. Moreover, AirDNA is notoriously known for its unaffordable subscription fees for access to multiple markets.
In addition, AirDNA currently shows an overall rating of 3.5 out of 5 stars on Trustpilot, and the Airbnb hosts’ reviews reveal a lot of technical and data problems.
Related: AirDNA Review: Is It Worth the Money?
3. Beyond Pricing Dynamic Pricing
Beyond Pricing also offers its own alternative to the Mashvisor Dynamic Pricing tool. Similar to our tool, their Dynamic Pricing algorithm aims to maximize revenue (not bookings). However, they don’t provide much information on the exact process and data that they use.
Furthermore, using the Beyond Pricing platform comes with a very expensive subscription fee. They charge 1% of booking fees. It means that if your Airbnb property generates $3,000 in monthly income, Beyond Pricing will take $30. Meanwhile, Mashvisor charges a flat fee of $9.99/month per property.
5 Best Markets for Airbnb Daily Prices
Automating and optimizing your pricing strategy on the Airbnb platform is a must to maximize your rental income and return on investment. Nonetheless, it’s equally important to buy an Airbnb for sale with the potential to generate a high nightly rate and bring in substantial revenue.
To help you, we used Mashvisor nationwide Airbnb data from April 2023 to rank the five top locations in the US market for daily rates. In our ranking, we focused on US cities with median property prices below $1 million to ensure affordability. We also selected markets with occupancy above 50% to ensure that the high daily rates don’t result in high vacancies, too.
So, here are the five US cities with the highest nightly rates in 2023, arranged in descending order:
1. Palm Springs, CA
- Median Property Price: $977,993
- Average Price per Square Foot: $566
- Days on Market: 67
- Number of Airbnb Listings: 1,276
- Monthly Airbnb Rental Income: $5,380
- Airbnb Cash on Cash Return: 3.62%
- Airbnb Cap Rate: 3.65%
- Airbnb Daily Rate: $412
- Airbnb Occupancy Rate: 53%
- Walk Score: 59
2. Asbury Park, NJ
- Median Property Price: $905,829
- Average Price per Square Foot: $534
- Days on Market: 89
- Number of Airbnb Listings: 128
- Monthly Airbnb Rental Income: $5,527
- Airbnb Cash on Cash Return: 3.44%
- Airbnb Cap Rate: 3.47%
- Airbnb Daily Rate: $400
- Airbnb Occupancy Rate: 50%
- Walk Score: 91
3. Saugatuck, MI
- Median Property Price: $858,504
- Average Price per Square Foot: $448
- Days on Market: 52
- Number of Airbnb Listings: 159
- Monthly Airbnb Rental Income: $5,944
- Airbnb Cash on Cash Return: 4.66%
- Airbnb Cap Rate: 4.70%
- Airbnb Daily Rate: $343
- Airbnb Occupancy Rate: 51%
- Walk Score: 63
4. Gatlinburg, TN
- Median Property Price: $796,898
- Average Price per Square Foot: $474
- Days on Market: 111
- Number of Airbnb Listings: 768
- Monthly Airbnb Rental Income: $4,803
- Airbnb Cash on Cash Return: 4.24%
- Airbnb Cap Rate: 4.28%
- Airbnb Daily Rate: $341
- Airbnb Occupancy Rate: 51%
- Walk Score: 62
5. Bar Harbor, ME
- Median Property Price: $621,900
- Average Price per Square Foot: $402
- Days on Market: 113
- Number of Airbnb Listings: 297
- Monthly Airbnb Rental Income: $6,594
- Airbnb Cash on Cash Return: 7.68%
- Airbnb Cap Rate: 7.75%
- Airbnb Daily Rate: $321
- Airbnb Occupancy Rate: 65%
- Walk Score: 77
Note: The five markets above might face various Airbnb laws and restrictions, and investors need to check out the legalities before buying a property in any of them. Otherwise, you might not be able to run a non-owner-occupied short term rental there. A good place to start your research is the Mashvisor short term rental regulations.
Acing Your Airbnb Pricing Strategy With Mashvisor
While coming up with an up-to-date, dynamic Airbnb pricing strategy is a must, it is not easy to implement unless you access the best tools. You need to take into account multiple factors that keep changing all the time. Keep a constant eye on numerous forces and actors that are at play in the local Airbnb market.
Instead of such an active, stressful process, you can use the Mashvisor Dynamic Pricing tool. The tool uses real-time data from active Airbnb listings to propose the optimal daily rates for maximum revenue.
Moreover, it comes with an option to automate pricing adjustments and directly transfer them to your Airbnb booking calendar. In this way, you will not only be able to set the best nightly rates day after day but will do so in a fully passive manner.
To learn more about how Mashvisor can help you ace your pricing strategy on Airbnb, schedule a demo with our experts today.
Originally published at https://www.mashvisor.com on June 26, 2023.
