How to know when to raise prices?

Melissa shared on Anecdotes June 2014

www.airbnb.com/groups/content/content-90476

Rate Increases

Hello fellow hosts,

By what percentage do you raise your rates each year? And at what point do you post your rates for the upcoming season?

Thanks!

Melissa
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Kaye
Kaye2 years ago
I am also curious about these 2 questions.

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Nic and Rach
Nic and Rach2 years ago
Kaye, Ang galing mo naman naka 6 ka na ? wow ! apat pa at meron ka ng super host status. Meron akong tanong ano ang napansin mo rito sa mga grupong ito ? ano ang gusto mo at ano ang ayaw mo sa grupo iyon ang ibig ko sabihin. Salamat !

Mauricio
Mauricio2 years ago
Hi,

Since my rates are in US$ and lately the US dollar is becoming stronger versus the local currency (where I have my rental property) then I haven't raised the rates for a while; anyway I'm making more because of the better exchange rate.

Mauricio

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Lakshman and Indira
Lakshman and Indira2 years ago
I feel it should depend on number of bookings you have if your property has more than 80% occupancy, you should think of an increase , otherwise you are not underpriced

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Nic and Rach
Nic and Rach2 years ago
My rate has been fixed for at least 1 year now and I can not raise it due to a heavy Airbnb competition in my area. However, Airbnb will make a recommendation if your rates are low or high.

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Sheri
Sheri2 years ago
I'm also in giant Airbnb market so I change my prices based on whether I am getting inquiries or bookings. Generally over the years I have lowered my nightly price (not raised it), but added a cleaning fee so it all works out. My friends who have been doing this through Home Away for years have also recently had to lower their prices due to heavy competition despite having more than 100 reviews. For many guests, price is the primary, sometimes only factor and it does not matter to them about hospitality experience, so in these very competitive areas, we have to stay in the game by following the trend in pricing.

Salvia
Salvia2 years ago
Yes, apart from the exchange rate Competion is for sure THE factor to bear in mind. But apart from that another perspective: I have one of my rooms on wimdu, a preferred platform among Germans to book with. (I hardly get guests through them, most likely because I am booked via airbnb so much. But as Germans are HIGHLY price driven I recently LOWERED my price by 20% on that platform to see what happens and voilá I got 3 inquiries in 3 weeks which is more than in the last 9 months alltogether...). But no Business resulted from them. (Interesting is that my ranking Position is now number 9 of 35listings in my "neighbourhood" (and another 400plus in Zürich) compared to a stable position Nr27 before.

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Rosemarie
Rosemarie2 years ago
Melissa - I'm constantly tinkering with my pricing, and, as it doesn't affect those that are already booked, you can change your price at will. I google area bnbs with similar offering to mine to see what they are charging. I also google area hotels to get a sense for their seasonal pricing, and then adjust my price accordingly. Cheers!

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Melissa
Melissa2 years ago
Good points everyone. Last season (my first season hosting) I had multiple requests for each week and booked every week that I offered...I had underpriced in comparison to other established hosts. I have the property listed on other sites as well-I did about the same % of bookings from each site which was great diversification but the downside is that the reviews aren't accumulating in one spot. I've started getting inquiries for next summer and yet I see that no other hosts in my area have upped their rates yet. Because of our location I assume they will, and I've heard of 25%-50% rate increases...but when I do the numbers that seems like a BIG increase even for something that was underpriced. Pricing is an art I guess so I will try increasing them 24% now and if I don't get any new bookings I will slowly drop the rate as next summer approaches...I feel that it is fair to keep the rates at whatever the going rate is...I certainly know that all of my maintenance expences will be going up...

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Alia
Alia2 years ago
I'm kind of fascinated by pricing. Airbnb's price guidance doesn't work so well because they combine Manhattan (200+/night) with our more distant neighborhood. I spy on my fellow hosts' listings, and compare what they offer and how they price it with mine, and try to keep myself mid range. I am very happy with the rate of occupancy I have.
I have found over the last 18 months that the sweet spot, depending on the season, ranges about $15/night-- but that could change depending on how many new local hosts join, how many new guests sign up, and how many more expensive hotels open up nearby. It's a constant flux, here, so I adjust my pricing almost weekly, depending how full we are.
Hope that helps!

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Serafina
Serafina2 years ago
Airbnb had a suggested price of $96 a night for my place initially and recently suggested a seasonal markdown to $54 a night, which is too low for me to bother with one- or two-night bookings. I generally price a little lower than similar nearby properties, and I've been fine with the lower occupancy I've had in Nov. and Dec.

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Mehmet
Mehmet2 years ago
Lakshman makes a good point. If you approach it like a hotelier, an 80% occupancy means you are too cheap, whereas if you increase your price and drop to 60-65% occupancy, you're in a correct pricing zone. Of course, do the math and make sure you're making the sane revenue. That being said, unless you are booked well, I think a 24% increase is too high. More like 5-10% each year to keep up with increasing costs and inflation,

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Sheri
Sheri2 years ago
Wow! I am around 90-95% occupancy, so my prices are too cheap. But I guess would feel anxious if I was only booked 60% of the time. Hmm this could be a game changer for me. I wonder if I raised my prices if I could stomach the waiting to see if anyone will book at the higher price. I guess the money should work out and that would be a lot less work for me, but I like to see months of bookings and lots of days blocked off - that makes me feel that my rent will absolutely get paid. If I change my prices, that's putting a lot of faith in the universe that it will all work out. I will really have to think about this - hmm hmmm hmmmm......

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Serafina
Serafina2 years ago
Sheri, your place looks great, and I love staying in Harlem when I'm in NYC. It might be hard to go too much over $100 for a private room for two, given the competition, but if you're staying that full, gradually upping the price sounds like a good move. At 60% occupancy, you'd have to be charging about $150 a night to make the same amount. Your four-night minimum seems to be a great way of moderating the amount of work you have to do in changing over guests. Especially during the winter, I don't want my rental to be too full because hosting people in winter truly does increase my costs--heat, extra water, and a lot of extra shoveling. I shoot for 50% or a single longer-term guest.