Airbnb Pricing Strategy

Airbnb Pricing: How to Understand the Algorithm and Utilize a Strategy

Face it: If you’re not making money at something you’re doing, it’s just a hobby. This knowledge is perfectly fine when it comes to your interests in baking, knitting, or archery, but it becomes difficult when you think about your Airbnb rentals. As an Airbnb multiple account manager, you need to maximize your profit each time you rent to a guest, or you face your business edging closer and closer to the “hobby” range with each sale.

We can’t talk about Airbnb pricing strategy until we talk about how Airbnb suggests prices for its rentals. Their pricing models are a great place to begin your pricing strategy journey. Once you get a handle on how they suggest pricing, you can add in your own analysis to create a price that covers your costs and provides you with a profit; all without discouraging guests from choosing your property based on price.

Utilizing the strategies of Comparables and Cost and Profit analysis will allow you to make smart Airbnb pricing strategy decisions that will most positively affect your bottom line. Couple these strategies with the knowledge of Airbnb’s pricing algorithm and the easy of hosting your properties on Hosty and your job has never been simpler.


First things First: How does Airbnb’s pricing work?

When creating a listing, Airbnb suggests a base price that best fits your property. This price is generated by mixing the following aspects:

   Property Specifics: Number of rooms, locations, amenities, etc

   Local rental market trends: Standard costs of living in your area

   Your qualifications: Are you a new host with on reviews or a long time Airbnb user with high ratings?


These factors are weighted and calculated up to help provide you with a base price suggestion. After you choose your price and publish the listing, Airbnb continues to suggest base prices that change daily due to demand and other desirable factors such as location, important amenities and travel times.

These base price suggestions are a great place to start, but in any good business, a little bit of extra effort goes a long way. By utilizing one or both of the Airbnb Pricing Strategies below, you can maximize your profit while keeping customers happy.


Option A: Comparables

Put your Facebook stalking skills to work! Researching other properties is a great way to make sure that your pricing is following demand. Demand is a great Airbnb Pricing Strategy because it can make you some extra revenue when your location at the most desirable, and keep it competitive when it’s not.

1) Due to Airbnb’s fantastic search features, you can search for hundred of properties in your city or ones like it that compare to yours in various ways. Same number of bedrooms, same distance to sports stadiums, same awesome pool and fitness center combo- whatever it is, you can search for it and compare the price of a similar listing to yours. Checking our similar places with comparable amenities can help you decide if you can charge more for your property. Furthermore, using Hosty’s Airbnb management software with smart pricing tool and useful tags will help make pricing decisions even easier.

2) Use your research into comparables work even harder for you. Determine what other properties aren’t doing, and make sure that you highlight those aspects in your property. For example, set cheaper weekly or monthly prices to encourage longer stays or highlight the fact that you’re willing to entertain special offers and cheaper mid-week rentals. Basically, whatever it is that you can offer in order to stand out from your competition, do it.

Option B: Cost & Profit

Airbnb Costs and Profit

Time to dust off that textbook from that one semester in college where you thought it would be “fun” to take an accounting class. Luckily, when you’re talking about your own money, finances can actually be fun and really, really necessary. Remember the whole “if you’re not making money, it’s just a hobby thing?”. Yeah, that comes into play here.

This is the Airbnb pricing strategy that ensures that all of your numbers check out and that you’re breaking even when it comes to costs. The goal is to make sure that you’re always generating a return on all of your properties all of the time.

1) Cover your costs

Be real about the cost of your rentals. Add in mortgage, taxes, maintenance fees, cleaning fees, or fees to use amenities such as the gym or pool. All of these need to added into the cost of a rental to make sure that you aren’t paying money to have people rent a property from you. Also, consider if you just want to break even, or actually turn a profit on a property. Either one is fine, just make sure you add that consideration into the mix as well.

2) Don’t forget seasonal bills

 Does your water bill double in the summer? Does the heating bill triple when its cold? Ensure that you’re taking these costs into consideration when you’re setting your prices as to not get over charged when you least expect it. Think hard about seasonal costs and how they play into your bottom line. Don’t forget about less traditional seasonal costs, too. Does your city have an annual holiday where parades, drinking on the street, and general craziness is the norm? You may want to consider the extra cleaning or handyman fees that this even may contribute to each year.

3) Don’t overlook your hourly wage

 It takes time to update listings, talk to guests, set prices and organize your calendar. Make sure you’re actually getting paid for it! Consider adding in the cost of your time to your listings, so your daily tasks aren’t in vain. Luckily, this cost and the time it takes you to manage your Airbnb portfolio should go down significantly when you start using Hosty.

Thankfully, talking about money isn’t so bad when we’re talking about ways for your business to earn more. Using the Airbnb pricing strategies above should help to maximize your time and money. The question now becomes what to do with all of the extra cash you have.