I'm Sean and make over a hundred thousand dollars a month on Airbnb I'm
gonna give you 4 good reasons to raise your prices let's get into it
all right welcome back Airbnb family a lot of you have asked the same
question a few different ways and apparently our pricing strategy videos
only give you the tactics but not philosophy behind pricing so I'm gonna
tell you why most of you should be raising your prices indiscriminately
across all your properties across the board and there's some good reasons why
so first let's give you the four reasons and then I'm gonna tell you how to track
also what you should base your prices off of as like a baseline before raising
or lowering your prices so reason number one to raise your prices more than
normal your listing is new this is an SEO advantage if your listings new you
have three months where you're gonna pop up more than anybody else just because
your listings new this gives you the opportunity to charge more money you're
gonna get more views which opt like obviously means more bookings right so
the way you look at this is like look at it look at it like a funnel okay so for
every 100 views if you get two bookings it's a two percent conversion if your
rates are higher you might only get a one point five or one percent conversion
but if you're gonna get 50% more views or 100 percent more views for the first
three months then you're fine with half the conversion and higher margins
because remember now people's reviews say how much they paid for the listing
you want your reviews to say you've charged more money right that's good
so listing new to this leads into the next one because when your listings new
you also get a twenty percent off for new customers coupon so you should
charge more money when you have a coupon this is another conversion rate thing so
when somebody sees that get this special discount imagine Kohl's they have the
same model they mark everything up just to mark it down forty percent off when
that's their target price anyway right so if you have a coupon raise your rates
more so that way the coupon brings you down towards your target rate makes
sense you're still gonna collect the same
amount of money but you'll get a higher conversion percentage because people
want the coupon life is good that's how that works
three another good reason to raise your rates is when your calendar is open the
reason why is because you're gonna pop up in searches more again this is
another SEO thing the more dates you have available the more valuable your
property is because the more types of guests you can accommodate you
accommodate a three-month long stay or a one-month long stay two-week long stay
but the moment you have a three-day booking one weekend in the middle of
your calendar it ruins your ability to have that month-long stay makes sense so
this leads us to number four which is raise your rates if you plan on doing a
long-term discount I do this all the time
I jack my nightly rates up really high just so that way I can offer 50 or 60
percent off for the month and I yes I still get single night bookings at these
rates I never thought people would pay a
single night booking for so I'm making really good money on my single nights
and then of course 5060 percent off on the month Long's
which gives me more long-term stays which gives me less churn that gives me
less operations load I have less guests to attend to in and out and that's the
bulk of working in Airbnb business is it takes time to check yes in answer
initial questions check this out do the cleaning the turnover so if you have a
longer term stays it's just better for your business right so how should you
set your prices that's a big question so every city's different and this this is
the part where you're gonna have to take a few philosophies away from this video
I'm gonna give you two main ones that I use so first let's look at four-star
hotels they have a certain nightly price and I want you to base your competitive
strategy against four-star hotels and nightly prices so if you can occupy two
guests look at a king suite at a four-star hotel and try to judge your
prices based off of their for your bookings that are further into the
future of course when it gets closer and closer to the date of arrival you're
gonna start fires selling off these listings of course to make sure that
they get full but if you have more occupancy than a hotel
it might seem hard to do this right but there's a solution so take a double
suite right one that has two queen beds that can occupy four people find out
what the nightly rate is for that double suite and divide that by four that is
your weighted nightly rate per occupant at your competitor hotel do this at your
like few local hotels that are like most relevant to your area and get that
weighted nightly per occupant cost then take how many occupants your listing can
take multiply your occupant number by that number so if a hotel is $180 a
night for a double suite then that's $45 per person you're
ten person listing should be able to charge four hundred and fifty dollars a
night makes sense okay so of course these listings will get booked more in
the future the bigger the property the farther out your big bookings will come
so six weeks eight weeks ten weeks from now you'll get those groups at ten
twelve or fifteen now when it's a month from now three weeks from now there will
be less large groups and more small groups traveling so you're gonna start
to scale your listings prices down closer towards a competitive rate for a
group of two or three or four that's going to stay makes sense so yes that
$450 a night listing for ten occupants will become a hundred dollars a night or
$135 a night a week out right or ten days out you might even go as low as
sixty to eighty dollars a night day of for that property that you know the
correct $450 for crazy right okay so the other way to base your prices get on
Airbnb and look around your local area and find out what other people are
listing for and try to find the more expensive ones that are on instant book
okay and then go into their calendar like check availability when you go to
click on it it's going to give you like basically like grayed out dates where
it's unavailable and dates where it's open and a few of you think that those
great updates might be because they decided just not to list their property
those few days but you can tell which hosts are like actively full timing
their listing and which hosts are just kind of part timing so when you look
around your area look for those hosts that you can tell that this is a full
time Airbnb listing and that way it's on instant book the only days are ever
grayed out are days that are booked right so take a look at those and the
ones that are getting bookings and are the most expensive that's the rate you
want to start basing around set your prices there and if you perform well
then slowly raise your prices restaurants do this if their chairs are
always full then they're not charging enough for their food right you have 50
tables and 50 of them come to eat and you charge an average of 15 dollars a
plate that's $750 right on plate for 50 plates but if there's 50 tables and say
only 48 of them get booked like but you charge an extra $2.00 a plate sure
you lost 30 on the two plates that didn't eat but then you got an extra $96
on the plates that did and that's one plate per table so do that
multiplication by four right because most groups are four or two so with that
logic you slowly raise your rates until you don't have a hundred ocupado percent
occupancy you raise your rates some more until you're probably floating somewhere
around 94 percent occupancy I mean the way you do that is course you get your
big bookings far out and you slowly lower your rates further and further in
and you will get about 90 to 95 percent occupancy if you manage your rates
properly there are two two resources for you here you can use to also get a grip
for what you should charge for your prices that's air DNA and then
wheelhouse so here's how that works air DNA will give you a graph based on
percentiles what the lower 25% charge is what the median is with upper 25%
charges and also what those occupancies are - you can't tell which a listing is
also at the top of its occupancy and the top of its percentile for a listed price
sorry but err DNA will give you some insights on your area and I think they
like the reports like 90 bucks per city I think so this is not a good resource
for absolutely new people because you really have to understand the Airbnb
platform so you can digest the information that they're giving you it's
really just analytics and if you don't understand the Airbnb
it's gonna give you some information that you won't know what to take away
from another one wheelhouse they charge you to automate your pricing strategy
it's like 1% or 0.7% for like a little set of listings over ten I think but
they do have a free portion of the software if you choose not to automate
your services through wheelhouse you can so load your profiles up they still keep
your data which is what they would love to have and they'll give you pricing
recommendations based on their analytics and their algorithm and you can then
manually change your prices based on what they tell you so if you want more
of an advanced approach using wheelhouses free feature should work and
I'll leave a link for wheelhouse down below at the bottom of this video and I
hope all of this has been helpful for you but moral of the story here raise
your prices because when I do consulting calls with you guys on my my clarity
comm there Mike AFM website a lot of you tell me all
about your property you have questions and your questions aren't usually about
price but you tell me how much you're listing your place for and how many
people you can host and all the time you guys are just charging way too
little it's this is a conversation I have with many of you it's ok first
let's talk about your pricing and restructure it you'd be surprised how
many of you are selling yourself short and let me tell you why you do this I
know this is kind of like a bonus topic here a little psychology for you the
reason why I think a lot of you are lowering your rates to the price that
they are or just setting them at the price that they are is you're looking at
your costs right the reality of your business
well my rent is this much or my mortgage is as much the stuff that I have to buy
for my listing is XYZ price and you have this bundled cost and you're like well I
would like to triple that right or I'd like to double that and so that's your
target goal you're like well if I can get you know 70% occupancy to double my
money then I would just need to charge this much per night I think you guys are
kind of like reverse engineering your price based on your income goals there's
nothing really wrong with that but you're definitely not maximizing profit
and business is about maximizing your profit not just hitting your little
income goals remember you're not an Airbnb host anymore you are a business
owner run it like a business and make a lot of money because that's why we're
here is to build a better life not just cover our rent so thank you for watching
Airbnb automated and I will see you on the other side
you