How to price your listing
A question I get all the time is how do I set the price for my listing? This can be a price for a room, a few rooms or the entire house. When it comes to pricing your listing on AirBnB, I have a few strategies I recommend.
1) Look at other Airbnb listings in your area. I recommend that you log into AirBnB as a traveler and check out other listing in your area and around you in neighboring cities to see what is being offered. When you do this, you will get a good idea for what others are asking for their rooms or homes as well as how they are writing up their descriptions and setting their property up differently from others. When you are looking at their pricing model, look at the daily, weekly, and monthly prices to get a good idea for a baseline price and adjust accordingly. You want to see if there are any places similar to your place. Find those places and what their nightly rate is. Then do the math and see if that pricing makes sense for you. Take the day rate and multiple it by 31 – to get the monthly rate. Then think about your monthly costs. The cost of the mortgage, utilities, any extras like cable/wifi, etc. Then create a day rate that makes sense for you to charge. Then consider if you need to add in a cleaning fee. A cleaning fee is a one-time fee per guest booking. Once you get all that figured out – this is your baseline daily rate.
2) Another way to figure the pricing for your home, is to use the total value of your property to figure out how much you should charge. Rule of thumb on renting a place out – monthly cost to rent out an entire house is 1% of the total value of the house. So if your house is worth 300k – you should be getting 3,000 a month – for the whole house. Or another way to look at it would be if you have two rooms in the same 300K house that you are renting out and letting people use the rest of the house and you still live there, then maybe you can earn $1500 per room per month. This is just a general rule of thumb and a way to start out figuring out your costs, but it is not always realistic based on market, time-of-year, and the condition of your home or the rooms you are renting. So it is just a way for you to think about how much you could be potentially making a month. You still have to consider the cost of your expenses for the property as well, and those are variable and unique for everyone – such as gas, electric, cable, wifi, trash, water, etc.
3) Research how much a 1 bedroom 1 bathroom apartment is renting for in your area. How much is that a month? Your rooms could potentially rent for that same rate at a minimum. I also recommend looking at how much a studio apartment costs. Now this is also not always realistic. For example, in my area, a studio apartment and a 1 bedroom, 1 bathroom goes for more than $1200-$2000 a month, and I am not going to charge that for a room. So you have to be realistic and think about your travelers, your location, and the amenities you are offering to your guests.
4) Use sites like zillow.com, www.mashvisor. com, clustrmaps.com, and airdna.com to research the value of your property and use their calculators to help you determine what you should be charging for rent. Some of these sites have paid subscriptions, and I am not telling you to sign up for that. You should be able to find this information for free and get some ideas for pricing models here as well.
5) The last thing to do is to look how much your local hotels and motels are charging a night. Sure some are really high, and some are going to be low, but you can get a great idea for what the pricing models look like to travelers coming to your area.
These are the 5 ways that I recommend you start looking at how to price your place and working on getting some baseline numbers established for your daily, weekly, and monthly costs. AirBnB allows you to offer travelers discounts, so as you establish your pricing, take advantage of the long-term stay discounts, and pay attention to the costs that AirBnB is charging so that you can adjust your percentages and baseline daily rate accordingly. With this, I also recommend that you turn off “Smart Pricing” and you manage your rate yourself.