You’re probably not surprised to hear that Airbnb is quickly becoming more popular than hotels among many travellers. Lots of guests prefer the idea of renting from another person compared to giving their money to a business when they travel. Airbnb hosting has taken off as you don’t need to own a separate property to do it successfully; you can rent out a room or two in your home if you have the spare space. Whether you’re using your spare room or investing in an entire property to list on the site, Airbnb hosting is definitely a great way to earn an additional income or even start your own business in the property market.
Airbnb: How Much To Charge?
If you want to get started with hosting on Airbnb, then knowing much to charge is likely going to be one of the biggest questions that you have. You will want to make sure that your rental rates are competitive, not so high that potential guests overlook your listing to find a cheaper one, but not so low that they are put off booking as it seems too good to be true. Finding the pricing sweet spot can be tough when you first start out on Airbnb, but thankfully, we’ve got some tips from the UpperKey to help you make sense of it all and figure out how much you should charge.
Determining Your Minimum Nightly Rate
How much should I charge for Airbnb? If you are renting out an entire place, it’s easier to figure out your minimum nightly rate compared to renting out just one or two rooms in your property.
To do this, figure out the monthly cost of running the property including the mortgage or rent that you pay and any utility bills, council tax, etc. Then, divide the total you get by thirty, which is the average number of days per month, to get the minimum amount that you should charge each night if you want to break even, based on somebody staying in the property every night. Of course, you’re probably not going to have a guest in the property every night, and you will want to make a profit, so once you have the basic costs per night you can figure out how much you want to make on top of it. A good way to determine how much you should charge is to look at listings in your area for properties that are similar to yours and see how much they charge.
Cleaning Costs
Once you have an idea for how much you are going to charge per night, it’s time to think about how much time and money it’s going to cost you each time you clean the place and get it ready for the next guest. How much can I charge for Airbnb cleaning?
If you have a small apartment, then cleaning it between guests may not take a lot of time or products, so you could just add a small cleaning fee on to the nightly rate. On the other hand, if you are renting out a large home that is likely to take a long time to get ready for the next guests to arrive, then consider adding on more by way of a cleaning charge. Cleaning fees can be added as an additional expense to guests separate from the nightly rate or rolled into your nightly fee if you don’t want to put off guests that might be put deterred by a separate cleaning fee if they are only staying for a night or two. If you are going to hire a cleaning company to prepare the property between guests, then the cleaning fee should cover at least their charge.
Look at Comparable or Similar Properties
Once you have covered the above basics to figure out how much you need to charge to cover your monthly running expenses and cleaning expenses for the property, the Upperkey suggests that it’s time to look at other similar rental properties in your area.
Check out your competition on Airbnb and use other short-term listing sites to get a general idea of what properties like yours are going for in your area. This will help you determine a range for how much to charge on Airbnb, along with helping you get a better idea of where you should price your property to be competitive.
Wherever possible, you should look to get on the cheaper end of the scale compared to similar properties to entice guests to book your place over the competition. But, avoid going too low as not only does this mean less profit, but it could also end up backfiring. When a property is priced much lower in comparison to similar properties in the area, this could cause potential guests to assume that there is a problem and avoid it.
Experience on Airbnb
How long you have been listing your property on Airbnb will also determine how much you should charge as a nightly rate. How much to charge for my Airbnb when first starting out as a host? In general, the UpperKey recommends that people who are new to Airbnb as a host should consider setting a lower rate for their listing to start with.
This is because you are unlikely to have many, if any positive Airbnb reviews, which could impact your bookings. Instead, start by offering a discounted rate will give you the chance to attract more guests to your Airbnb, where you can provide them with a great experience and build up your positive reviews on the site until it gets to a point where you are in a position to charge more. The more positive guest experiences at your Airbnb property, the more you can charge in the long run – especially if you become a Super Host, as guests are often willing to pay more to stay at one of these properties.
Seasonal Pricing
Another thing to consider when you are determining the right price for your Airbnb listing is seasonal prices. Airbnb listing prices can change a lot depending on the peak or off-peak seasons. For example, if you live in an area that has seasonal events such as Christmas markets or summer festivals that a lot of people attend, then you may want to consider raising your prices during these periods, as guests will often be more willing to pay more than average in order to have somewhere to stay for the event.
On the other hand, during the off-peak seasons when visitors to your area might not be as common, you can put prices down to encourage guests to come and stay.
Occupancy Rate
It’s a good idea to speak to Airbnb property experts such as the UpperKey, or you can use online tools to determine what kind of occupancy rate you will be able to expect from your Airbnb. Figuring out the expected occupancy rate can be an ideal way to help you gather important data that you can use to determine how much you should charge per night.
You can also get a better idea of what you might get in terms of occupancy by checking out current listings of similar properties in your area. There are various online tools that you can use to see the occupancy rates of Airbnb properties, which you can then compare to how much the price per night is.
Use Airbnb Smart Pricing
You can use Airbnb Smart Pricing, a tool available through the Airbnb website that collects and analyses demand and supply data for Airbnb properties. Along with this, it also gathers information about peak and off-peak seasons, tourist activity, similar listings, and other factors and trends in the local market to help you come up with the best price for your Airbnb listing at any given time.
If you are at a loss with what to start charging guests to stay in your Airbnb property, then this tool will provide you with a suggested price. However, there are a few downsides to using this tool, including the fact that some Airbnb hosts say it gives a price lower than the market average. So, it may be worth using it in conjunction with other methods to help you get the best price for your short-term rental.
If you have a spare room or an entire property, you can make extra money with it on Airbnb. However, to run a successful Airbnb listing, it’s first important to ensure that you determine the right price.