Airbnb pricing strategies in 2025: a comprehensive guide to maximising your short-term rental revenue

Welcome to the world of Airbnb hosting! You've invested in a fantastic property, created a beautiful listing, and are ready to welcome guests. But before you hit "publish," there's one crucial step: setting the right price for your Airbnb.

Finding that sweet spot between maximising your income and attracting guests can feel tricky. But fear not! This comprehensive guide will equip you with the knowledge and strategies to develop a winning Airbnb pricing strategy in 2024.

We’ll cover:

• Key factors to consider when pricing your Airbnb
• How to research and set competitive prices
• Advanced Airbnb pricing strategies
• Common pricing mistakes to avoid
• Tools and resources to simplify pricing
• Final thoughts: mastering Airbnb pricing
• FAQ about Airbnb pricing

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Now, let's dive into the world of Airbnb pricing!

Key factors to consider when pricing your Airbnb

There's no one-size-fits-all approach to pricing your Airbnb. Several factors influence your ideal rate, demanding a strategic and flexible approach. By understanding these, you can tailor your approach to align with market conditions and guest expectations. Let's explore these key elements:

1. Pricing models: choosing the right approach

Selecting the right pricing model is one of the foundational decisions for your Airbnb strategy. Let’s dive deeper into the four most common pricing models and how they can fit different types of hosts.

Fixed pricing

• Overview: your nightly rate remains the same regardless of season or demand
  
  
• Advantages:
  • Simplicity is its biggest draw
  • Guests appreciate the predictability
    
    
• Drawbacks:
  • Inflexible; you risk missing out on peak-season revenue
  • May make your property uncompetitive during low-demand periods

This model works best for niche properties in areas with year-round demand, such as near universities or corporate hubs.

Seasonal pricing

• Overview: rates are adjusted to align with high and low seasons
  
  
• Advantages:
  • Enables you to capitalise on demand fluctuations
  • Boosts revenue during holidays, festivals, and other high-demand times
    
    
• Drawbacks:
  • Requires continuous monitoring to ensure accuracy

For example, if you have a beach house, you can charge premium rates during summer and reduce them in winter to attract budget-conscious guests.

Dynamic pricing

• Overview: tools like Beyond Pricing or Wheelhouse automate rate adjustments based on market trends and competition
  
  
• Advantages:
  • Maximises revenue without manual effort
  • Helps you stay competitive even during market fluctuations
    
    
• Drawbacks:
  • Software fees can add up
  • Tools may undervalue unique properties if not configured properly

Dynamic pricing is ideal for hosts who manage multiple listings or those in highly competitive markets.

Tiered pricing

• Overview: pricing varies depending on factors like guest count, length of stay, or additional services
  
  
• Advantages:
  • Tailors pricing to guest needs
  • Encourages longer stays through discounted rates
    
    
• Drawbacks:
  • Requires careful planning to avoid guest confusion

This model works well for properties that cater to diverse groups, such as couples, families, or business travellers.

2. Location and property-specific factors

Your property’s unique characteristics directly impact how much you can charge.

• Location: a centrally located apartment in a major city can command higher rates than a rural cabin unless the cabin offers a unique experience.
• Amenities: features like high-speed Wi-Fi, hot tubs, or EV charging stations can justify higher pricing.
• Size and style: larger homes or unique properties, like tiny houses or treehouses, often appeal to specific guest segments and can be priced accordingly.

3. Targeting the right guests

Knowing your target audience is critical to setting the right price. Tailor your rates based on their expectations and willingness to pay.

Examples of guest types

• Families: highlight family-friendly features like cribs, high chairs, and large common areas. Offer discounts for extended stays to appeal to families on vacation.
• Business travellers: prioritise amenities like fast Wi-Fi, quiet workspaces, and flexible check-in times. Charge premium rates for short stays during weekdays.
• Luxury travellers: high-end amenities like premium bedding, concierge services, and exclusive experiences can justify elevated pricing.

Understanding your ideal guest persona helps align your pricing with their budget and needs.

How to research and set competitive prices

Setting your Airbnb pricing starts with thorough research. Let’s explore how to establish a rate that attracts bookings without leaving money on the table.

1. Analysing your competitors

Researching comparable listings in your area helps you gauge the market and identify opportunities to stand out.

Steps to conduct competitor research

1. Look for listings with similar features (size, location, and amenities).
2. Note their pricing during weekdays, weekends, and high-demand periods.
3. Study their occupancy rates and guest reviews.

Key tools for competitor analysis

• AirDNA: offers insights into market demand, average daily rates, and seasonal trends.
• Mashvisor: provides data on market performance and competition.
• PriceLabs: analyses competitor pricing and helps adjust rates dynamically.

2. Calculating your baseline price

Your baseline price should cover all costs while leaving room for profit. Break down the following:

• Fixed costs: mortgage, property insurance, and taxes
• Variable costs: cleaning services, utilities, and consumables like coffee or toiletries
• Airbnb fees: hosts typically pay a 3% fee, and guests pay a service fee of up to 15%

3. Leveraging Airbnb’s Smart Pricing tool

Airbnb’s built-in Smart Pricing tool adjusts rates based on local demand and competition.

Advantages

• Saves time by automating price updates
• Ensures competitiveness during off-peak periods

Drawbacks

• May undervalue unique properties or premium listings
• Limited ability to account for one-off local events

Pro tip: use Smart Pricing as a baseline and manually adjust rates for special occasions or local holidays.

Advanced Airbnb pricing strategies

Once your base strategy is in place, these advanced tactics can help optimise revenue and boost occupancy.

1. Seasonal and event-based pricing

Adjusting rates based on demand during holidays, festivals, and local events is a proven way to maximise revenue.

High-demand periods

• Holidays: raise rates during Christmas, New Year’s, or Spring Break.
• Local events: capitalise on sports tournaments, festivals, and conferences.

Off-season strategies

• Lower prices slightly to attract budget travellers.
• Offer add-ons like free parking or flexible check-in to sweeten the deal.

2. Discounts to drive bookings

Offering discounts is a great way to fill your calendar and attract specific types of guests.

Discount types

• Early bird discounts: reward guests who book far in advance
• Last-minute deals: fill vacancies for dates just a few days away
• Extended stay discounts: offer reduced nightly rates for stays longer than a week

Benefits

• Increases occupancy rates during slow periods
• Appeals to budget-conscious travellers without permanently lowering your base price

3. Dynamic pricing tools

Dynamic pricing platforms, like Beyond Pricing, Wheelhouse or PriceLabs, automate rate adjustments and help you stay competitive.

How they work

These tools analyse market trends, local demand, and competitor data to optimise your pricing in real time.

Challenges

• Subscription fees can add up
• Requires occasional oversight to ensure rates align with your property’s value
  
  

Common pricing mistakes to avoid

Even experienced hosts can stumble when it comes to pricing. Avoid these pitfalls to ensure your Airbnb remains profitable.

1. Overpricing or underpricing

Overpricing

• Leads to vacant nights
• Can deter guests from even considering your listing

Underpricing

• Cuts into your profits unnecessarily
• Sends a message that your property lacks value

Solution: Use tools like AirDNA and Mashvisor to find the perfect balance.

2. Ignoring market trends

Failing to adjust for shifts in demand or new competitors can hurt your performance.

Tips:

• Check local trends weekly to stay ahead of the curve
• Use forecasting tools like PriceLabs to anticipate changes in demand

3. Forgetting to account for costs

Not factoring in operational costs or Airbnb’s commission can lead to losses.

Pro tip: always calculate a baseline price that ensures profitability, even during slow periods.

Tools and resources to simplify pricing

Maximise your Airbnb’s potential by using these top tools:

• AirDNA: provides valuable market insights and demand forecasts
• PriceLabs: offers dynamic pricing and competitor analysis
• Beyond Pricing: adjusts rates automatically to match local trends
• Mashvisor: ideal for market analytics and long-term planning

Final thoughts: mastering Airbnb pricing in 2024

The key to success as an Airbnb host lies in your pricing strategy. By balancing market research, operational costs, and guest expectations, you can find the sweet spot that drives bookings and maximises profitability. Flexibility, ongoing research, and smart tools will help you stay ahead of the competition.

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