Airbnb Pricing

How To Form A Winning Airbnb Pricing Strategy For Your Rental Space?

Why you need Airbnb pricing strategy?

In the past years, the Airbnb platform has registered tremendous growth. According to the stats that were last updated in January 2020, Airbnb rentals are active in about 220 countries and 100,000 cities around the world. You will find about 7 million listings on the Airbnb platform. Airbnb also claims that till now, its properties have hosted about 500 million guests since the day Airbnb started. 

Needless to say, these figures are huge! They can give any person a relative idea about how rapidly the Airbnb network is growing. The prime reason for this fast growth is the decaying hotel model that is quickly losing its charm and its customers. According to the reports, the hotel model has approximately lost $450 million in direct revenues to Airbnb. Thus, from this, it can be clearly established that the Airbnb platform is fast developing deep roots in different corners of the globe. But along with its expansion, this platform is also opening several gates for its local hosts to grow and develop.

But before we delve into this, one needs to understand that managing a rental business is not an easy task. For it, you need to strategize and to make well-informed decisions. One such field where the Airbnb managers need to practice caution before making any resolution is when devising the Airbnb pricing strategy. Now, devising a well-thought Airbnb pricing strategy is an important step for a rental. It can help you in increasing profits. 

But in case you don’t already know it, preparing the Airbnb pricing strategy is a little tricky. This is because several factors are taken into account while making this decision. Hence, in order to help you with Airbnb pricing, we have prepared a list of comprehensive strategies that you can employ to make your work easy. But before we begin with that, first, let us learn about the key points that need to be considered when working on Airbnb pricing. 

How to make your Airbnb pricing work?

While deciding the rental pricing, here are some key points that you should consider.


The prices of any property, whether you are renting it or selling it off, depend upon the amenities you can offer. So, if your property has something extra that goes beyond the basic, then it only makes sense to set your nightly stay charges higher than that of other places. So, if your property has a swimming pool or a hottub where your guests can relax after a tiring day, or if the views from your rooms are beautiful, then this should bump your Airbnb pricing.


The place where your property is located plays a huge role in determining your Airbnb pricing. So, in order to appropriately factor in this element of location, begin by engaging in a little research work to find out the pricing of similar properties in your area. This will give you an idea about your base prices. Also, on Airbnb, you get an option to find out the suggestive prices of your place based on your location. But here the price tip is not so accurate. Hence, the option to engage in some research is more reliable.

Security deposit

When deciding the stay charges, the hosts should also pay attention to determining a security deposit amount. A lot of hosts are uncertain about security deposits and believe that it will fend off the guests. The truth is that about 59% of the Airbnb hosts ask for a security deposit. This is a large number. And so, you should not worry about making it a requirement. Plus, asking for the deposit also makes the host feel more secure.

Cleaning fee

Cleanliness is an important standard for all Airbnb properties. Many hosts in order to manage this requirement, hire cleaning services that incur additional costs. Thus, in order to ensure that you do not bear the brunt of these costs, you should make it part of your Airbnb pricing. But this should be done properly and conveniently by being stated on your Airbnb listing. 

Offering discounts 

Now, many short-term rentals consider the seasonality factor when deciding the overnight charges of their property. One does this because, based on the seasons, the earnings of a property can fluctuate. So, during the off-seasons, if the turn-up of the guests at the property is low, then in order to deal with this, the hosts can employ discount offers to attract more guests. Since the discount amounts affect your net earnings, hence while determining your Airbnb pricing strategy, these should be factored too.

Extra Guest Charge

If you will charge an extra fee from the guests who come in with additional people is a decision that you have to make on your own. According to the reports, about 44% of the hosts demand an extra fee for additional guests. But whether you should charge it not, should depend upon the type of property that you are renting. However, you should note that if you decide to charge any such amounts, then you should mention it in your Airbnb listing to offer clarity to your customers. 

Now that we have discussed the factors that should influence your Airbnb pricing, let us move ahead and learn about the Airbnb pricing strategies for price optimization.

What is the Airbnb pricing strategy for price optimization?

Some Airbnb Pricing strategies that can increase your net profits are discussed below. Have a look.

Maximum charges on an overnight stay

If you are a host who owns a rental property at an exclusive place where the landscapes and scenery are exceptionally good, then you can definitely pull off this Airbnb pricing strategy. According to it, you will have to set visibly higher overnight charges at your place in the hopes that you will only attract the high-paying guests who don’t mind paying extra money in exchange for the breathtaking views. 

By implementing this strategy, you will score fewer bookings because not all people will agree to pay the extra charges. But this is beneficial for you as you will now make good earnings even with fewer bookings because of high profits from a single reservation. Also, fewer bookings will mean less work for you and fewer problems. This, in turn, will allow you more time to manage your Airbnb business. However, one thing that you should probably note here is that this pricing strategy is only useful for rentals that have something unique to offer. So, if your rental is not special in any way, then this Airbnb pricing strategy might not work for you.

Long term renting to the guests

In the Airbnb world, this type of hosting is popularly called lazy renting. So, in the long term renting what you do is to let out your apartment on rent for a relatively long period of time. So, for example, consider that you are a host who owns property in NYC. Now, because for some reason, if you move abroad and you decide to rent your property to some people for this timeframe, then it is considered long term renting to the guests.

The main benefits of using this type of strategy where you charge monthly rent are that it reduces the risk of highly regulated and in-demand locations and lowers your management efforts. However, in case you employ this Airbnb pricing strategy, then there are also some cons of practicing it that you should know. These disadvantages include things like lower profits and extended formalities of signing a rental agreement. Plus, following this strategy also means showing your property to different people which can probably increase your work.

Maximum fill percentage strategy

In this Airbnb pricing strategy, your main focus is to have as many guests at your property as you can get. This strategy is very beneficial for people that solely rely on their property for earning money, and spend a large part of their time focusing on their Airbnb businesses. This enables them to work with full dedication to delivering exceptional services at the rental, which in turn, helps them in renting the maximum space in their property.

The high occupancy rate that is the focus of this Airbnb pricing strategy helps in ensuring a stable income. However, you should know that for gaining good profits using this strategy, you will have to put in hard work, attention, and serious dedication. Also, in using this strategy, you should be ready to charge lower than average overnight charges at your place in the hope that it will bring more customers.

Practice balanced Airbnb management

If you are an Airbnb host who is dedicated to managing their business, and you have a group of people who can assist you in the management, then this balanced Airbnb pricing strategy is meant for you to assist you in increasing your earnings. By following this strategy, which is a mix of all the aforementioned strategies, you can maximize your revenue and manage a high fill rate. However, you should opt for it only if you have enough time on your hands because this strategy requires you to plan and work hard.

Now, in order to practice the balanced Airbnb management, first of all, you will need to up your game and to prepare an extended plan. So, for this, if you are operating a property that is unique but where the business slows down during the off-season, then you should sign a long term rental agreement for the slow season to have your income flowing. However, during the on-season, you can either choose the maximum charges or maximum fill percentage strategy to maximize the profits. 

So, these are some Airbnb pricing strategies that the hosts should implement for determining optimized prices.

How can you manage Airbnb pricing smoothly?

Now that we have an idea about the Airbnb pricing strategies, that can prove useful for the hosts, lets us now move to our next section to see the different approaches to Airbnb pricing management.

Airbnb Smart pricing

This feature that is offered by the Airbnb platform helps the hosts in determining the right rental prices for their accommodation. In this feature, you can enter the minimum and maximum prices of an overnight stay, and using this data in combination with the information on supply and demand, the type, season, and location of your listing, the smart pricing will recommend the Airbnb pricing for your property. However, you should note that many hosts do not consider this feature reliable because it lacks the necessary accuracy.

Use manual pricing

Under this option, you get the chance to manage the Airbnb pricing of your property on your own. Now, this is a good thing considering that it gives the power to set the prices in the hands of the host, but it is also true that using this option increases the burden and stress of the host. Also, by using this option you can never be sure if the prices determined by you are accurate. However, if you are an experienced host and you have been managing your business for a long while, then maybe with your experience and expertise you can attain incredible results.

Try the Automation software

There are many automated software products available on the market that are designed to determine incredibly accurate prices of the Airbnb listings. These tools use various algorithms and take into account many factors like the seasonality, demand, supply, the day of the week, special events, etc. to come up with the Airbnb pricing of a property. One such automated software that is popular for its zeroing accuracy in regulating Airbnb prices is Hosty. This Airbnb management software reduces the gaps and blank days in your booking register by deciding optimized nightly rates that are determined according to your set rules.

What are some FAQs about Airbnb pricing strategies?

In this section, we will take some time to answer common queries that our customers have asked about Airbnb Pricing.

Do many hosts use the Automation software, or most people still rely upon smart pricing for determining Airbnb pricing?

Presently, if you will follow the trend and talk to the Airbnb managers, you will notice that many hosts are in the process of making the switch from Smart pricing to third-party automated software. The independent software is more accurate, and at the same time, it also offers the necessary level of customization capabilities, which is driving this change.

How does Hosty’s tool help in determining correct Airbnb pricing?

Hosty’s Airbnb tool is a third party automated software that has been primarily designed to reduce the many tedious tasks of Airbnb managers. This software’s tool allows the hosts to create customized pricing rules that can guarantee you maximum profit for your listings. The Auto Pricing tool considers various factors like the season, the day, your demand and supply, and many other things to reduce your gap days and to come up with optimized nightly charges.

What are the changes taking place in the short term rental sector?

The short term rentals have turned into a booming industry since the launch of the Airbnb platform.  The competition in this sector has risen significantly as every player in this field is trying to outperform another by offering great deals and good quality services. As a result of this, the prices have started depressing as well. But this is about to change soon, as more and more people make the switch from the manual price-determining to using comprehensive technology to decide final prices.  


Pricing is an important part of any business model. How much you are charging your customers for the goods and services decides your profit rates and your ultimate success or failure. This concept applies to the Airbnb hosting model as well. Therefore, it is significant for the hosts to decide the Airbnb pricing with caution. Things like the season of the year, your demand and supply relation, your cleaning fees, and the amenities you offer should be given special consideration. Apart from this, the host should also pay attention to the Airbnb pricing management software. Whether hosts should opt for the manual pricing, smart pricing, or automation software options should be decided upon only after detailed analysis.