Maximizing revenue on Airbnb often comes down to one thing: pricing.
Set it too high, and you’ll miss out on bookings. Too low, and you’ll sacrifice profits. That’s where automated pricing tools come in. These tools can make a real difference by adjusting your rates in real-time, saving you from manually tracking trends, competitor prices, and local events. But using them effectively isn’t as simple as just turning them on and hoping for the best.
To get the most out of automated pricing, you need a strategy—one that combines power of automation with your local knowledge and insights. This guide will cover practical ways to use these tools to boost your income, avoid common mistakes, and stay ahead in the competitive short-term rental market.
Skip the Basics: Make the Tool Work for Your Market
While automated tools adjust based on algorithms, you know your property and market better than any machine. Let’s say you’re hosting in a beach town. The algorithm might raise prices during summer vacation, but it may miss local nuances, like a regional holiday or a surfing competition that spikes demand for just one weekend. To get the best results, you need to combine the tool’s automation with your own market awareness.
Here’s a practical example: if you know there’s a concert happening in town that hasn’t made national headlines, you can manually override the pricing tool to adjust your rates for those specific days. Some tools even allow you to add events or adjust for specific market conditions, which can help you capture extra revenue when other hosts relying purely on automation miss the boat.
Set and Forget? Not Quite
A common misconception is that once you set up automated pricing, you can sit back and watch the money roll in. That’s not how it works. Automation should be part of a broader strategy that includes regular monitoring and adjustments.
Consider this: automated pricing tools typically optimize based on general market trends, but they can’t predict everything. For example, what happens if an unexpected weather event dampens tourism for a week? The tool might not drop prices quickly enough to fill your property. That’s why it’s critical to keep an eye on your listing and be ready to adjust manually when needed.
To stay ahead, make it a habit to check in with your tool’s dashboard regularly. Review the pricing suggestions, and ask yourself whether the tool is accounting for everything happening in your area. By combining the tool’s recommendations with your own judgment, you can boost occupancy without giving up too much revenue.
Customizing Minimum and Maximum Rates
One of the most powerful features of automated pricing tools is the ability to set minimum and maximum prices. These limits prevent your rates from dipping too low during off-peak times or skyrocketing too high when demand spikes. But setting these thresholds too high or too low can impact your bookings.
For example, if your minimum price is too close to your competitors’ rates, your listing might not stand out enough to attract last-minute bookings. On the other hand, setting the minimum price too low could hurt your revenue. It’s a balancing act that requires ongoing tweaking.
You might also want to set different pricing strategies for weekdays versus weekends or peak versus off-peak seasons. Some tools allow you to set seasonal minimums, ensuring that you don’t leave money on the table when demand is at its highest. For instance, during a holiday week, your rates should reflect the surge in demand, but once the holiday passes, quickly lowering your minimum rate could attract more bookings during the slower period.
Don’t Overlook Long-Term Stays
Automated pricing tools usually focus on short-term adjustments, but don’t forget the potential for long-term stays. Pricing tools sometimes neglect to adjust rates for guests looking to book a property for weeks or even months. A common mistake is leaving the tool’s default settings for long-term pricing, which can either drive potential long-term renters away with too-high prices or undervalue your property by setting rates too low.
For longer bookings, consider offering discounts that reflect the reduced overhead associated with fewer turnovers. Automated pricing tools often allow you to set these discounts, so make sure you’re using that feature. This way, you can fill gaps in your calendar while still bringing in consistent revenue.
Seasonal Adjustments: When Automation Falls Short
Automated pricing tools work well for typical seasonal fluctuations, but there’s more to seasonality than just summer versus winter. Smaller factors, like school vacations, local festivals, and even weather conditions, can affect demand in ways that the tool might miss.
For example, if you’re in a destination known for outdoor activities, unseasonably warm weather could extend your booking season beyond the usual cutoff. On the flip side, a rainy forecast could lead to last-minute cancellations. By keeping an eye on the weather and local events, you can manually adjust your pricing to reflect real-time conditions.
Price Gap Optimization: Filling the Calendar
One of the smartest ways to increase occupancy is by filling gaps between bookings. Let’s say you have a two-day window between two reservations—automated tools can help lower your rate just enough to make those two days more appealing to last-minute bookers without drastically undercutting your typical nightly rate.
However, it’s worth reviewing how your tool handles these gaps. Some hosts find that automated tools don’t always optimize for short gaps effectively. You may need to intervene and manually drop prices to ensure those odd days don’t go unbooked. Keeping your calendar as full as possible is key to boosting revenue, and gap management is one of the easiest ways to achieve that.
Tracking Performance Metrics
Any tool is only as good as the results it generates. Most pricing platforms provide reports that track key metrics such as occupancy rates, average nightly rates, and revenue per available night (RevPAN). If you’re not reviewing these metrics regularly, you’re missing out on valuable insights into how your pricing strategy is performing.
Look for trends in these reports. Is there a specific time of year when your occupancy dips? Are you consistently underpricing during certain periods? Identifying these patterns allows you to make smarter pricing decisions going forward.
Another valuable metric is booking lead time. Some tools offer dynamic pricing that adjusts based on how far in advance guests book. For example, if you notice that your property tends to book up well in advance, you might want to increase your prices for last-minute bookings, capitalizing on guests who are willing to pay more when availability is low.
Choosing the Right Tool
With so many pricing tools on the market, it’s crucial to pick one that suits your needs. Some are more user-friendly, while others offer more advanced customization options. If you manage multiple properties, you’ll want a tool that can handle large-scale adjustments across multiple listings. But if you only have one or two properties, a simpler interface might be more than enough.
It’s also worth looking at the pricing model of the tool itself. Most platforms charge based on a percentage of revenue, but some may offer flat fees. Make sure you’re comfortable with how much the tool is taking out of your profits and whether the features offered justify the cost.
Consider Automation Plus Human Touch
Automated pricing tools are indispensable for maximizing Airbnb revenue, but they aren’t perfect. The key to success lies in combining automation with your own knowledge of the market, local events, and property performance. By regularly reviewing and adjusting your strategy, you can ensure that your pricing stays competitive and your calendar stays full.
In the fast-moving world of short-term rentals, leveraging both automation and your personal insights is the best way to keep your business ahead of the competition. Also, integrating guest screening and verification software into your property can improve your bottom line by weeding out unwanted guests.