Hello, my friends! it’s Richard found of Short-Term Rental University and Airbnb super host. Today’s article is really important, it’s the pricing strategy that I recommend you adopt for 2018 and beyond.
We’ve been doing a lot of research on what’s happening. We spoke with Ian FB on pricing on our podcast. If you haven’t subscribed or listened to the podcast, please do so! We will include a link below. The latest data shows that with more choices – hotels, Airbnb, and more opportunities to stay in different places – guests are responding by booking later. In previous years, people would book Christmas, Easter, or summer holidays six months in advance. Maybe even a year in advance! They knew they wanted to go. The data now shows very clearly that people are booking much more close to the date of travel, roughly 30 days and under is becoming the norm.
That is not to say that there are not people that are booking Christmas a year out, that does exist. However, if people are booking 30 days or less than that’s a very different mindset that we as hosts must have. I know when I started hosting on Airbnb and homeaway.com I would love having my calendar filled! It brought me comfort and certainty. “Wow, I’m gonna have a great month three months from now!” Well, if that’s not happening then the inverse is true. I’m having discomfort that I’m not booked three months in advance. What do I do about that?
The first thing I do is be aware of the facts and the booking patterns. This prevents me from freaking out I because recognize that I need to focus on my 30-day time period. If that’s true, then what I want to do is make sure that my 30-day price period is priced accordingly. In my case, that means prices are higher. The people that are giving away their property weeks, months, or even a year in advance are likely doing it at the wrong price. They’re priced too low so the bargain shopper can come out and pick them off. That’s great news for you and me, the people that are comfortable knowing what the data shows.
We still deliver a fair value, I’m not talking about price gouging. What we are doing is saying we’re going to serve the people the way that they want to be booked. We are going to charge a fair price. So, in short – if we know that people are going to be booking 30 days in under and they want that flexibility we’re going to price accordingly.
I also use a dynamic pricing service. I personally believe very strongly in beyondpricing.com. What that helps me do is price appropriately based on all of these different variables that use big data like my supply in my neighborhood, the demand in my neighborhood, events in my neighborhood, the proximity, etc. Beyondpricing.com then calculates what my fair pricing is and I can tell you that their average increase in price is somewhere around 30 to 40 percent. I’ve experienced that and then more. I just recently booked something at 70 percent higher than when I priced it manually a year ago.
I’m encouraging hosts and people that are reading this article to do is to readjust your mind frame. Go away from “I want occupancy” towards “I want profitability.”
Go away from booking far in advance towards booking more close to the date.
Get comfortable with knowing that you’re actually charging higher prices and being more profitable
In closing, I know what I’m suggesting sounds uncomfortable. Everybody wants the comfort, of lots of bookings in the future – I get it. However, we have to change our minds as entrepreneurs, real estate investors, Airbnb hosts and this is where the market is going. So we’re going to be smart about it.
Realize the following:
We all have that same sort of uncertainty that says “I can’t charge $200 for my place, I have only charged $100! No one will pay $200” That little voice inside your head that we’ve all had.
I’m suggesting that you experiment with it. You will be shocked and amazed when the place that you manually price so low goes for $200. That hundred-dollar differential is all profit!
I hope you found this article helpful. I think it’s going to put a lot more money in your pocket in 2018 and beyond. If you liked it, give me the thumbs up. Please subscribe to the podcast there’s lots of great experts there and then also please go subscribe to the YouTube channel we’d really appreciated you!