Tim Hubbard shows how to tell if you're overcharging your Airbnb: use dynamic pricing tools to check if your minimum price hits often but the place stays empty. If it does, your minimum is too high. Set a wide gap between minimum and base price so algorithms can adjust, use different minimums for weekdays and weekends, and compare against similar local listings.
Questions this video answers
7, 30, or 60 days.
$200 per night.
If roughly 10%–15% of days were at minimum price and remained unbooked, that's significant.
Chapters
Welcome back to the show. I'm happy you're here again. I'm talking with a lot of you on a regular basis with properties all over the place. And if there's one thing that most people have in common, it's that they want a little more occupancy, they want a little bit more revenue. And the market has changed a little bit. So on a nationwide basis, we have seen rates come down a little bit and occupancies come down a little bit. Of course, this really depends on the market you're in. So we know real estate is not just one giant market, right? There's literally thousands of different markets and depending on which one you are in, you could have a little more competition. But there's one metric I'm just going to jump into it that's going to help you uncover if you're priced too high. That's really what it comes down to. That is, of course, assuming that you have a good property to start out with, right? So your listing set up well, it's designed well, and you do a really good job with your guest experience. If we don't have good reviews, then pricing strategy isn't going to really help us that much. So let's assume you've got those things managed. And there's really just one question to ask. Is your property staying booked and if it's not, if your occupancy is dropping? Well, we need to adjust the prices. I hope you're using a dynamic pricing tool like Wheelhouse or Price Labs. And assuming you are, there's a really handy dandy little metric that tells you how many days out of the near future you can set this 7, 30 or 60 days that your price is bottoming out. In other words, how many times over the next. Let's say 60 days is your price at its minimum. Just to make things easy, let's say your minimum rate is $200. If you look out over the next 60 days and the algorithms from these dynamic pricing tools. So Price Labs or Wheelhouse has set your price at that $200 a night. And this is the important piece, you're not getting booked at all. Well, then it's pretty clear that your minimum price is probably too high. Before we just jump to the gun, though, we're going to want to cross check ourselves and make sure that is indeed the case. But we'll get to that in one second. So this metric again is your minimum price, hitting dates within the next X period of time. You can define this in price lab. So seven, 30 or 60 days. Now, if you're out there and you're like, tim, I'm not using a pricing tool, first of all, you should be. But we have an easy way to check this on Airbnb. So if you're using Airbnb's dynamic pricing tool, where it's really simple, you can just open up your calendar and you can see how many days out of the next X period of time has that algorithm adjusted your price down to its very lowest price. So there are, of course, some times when you might expect your property to be at its minimum price. Maybe it's last minute, maybe it's tomorrow, and you don't have a booking. Maybe it's in the middle of the slow season where you hardly see any occupancy. Well, these are times where we can expect that. But if we look out throughout the year. So we got to remember that our prices are always changing. They should always be changing. So we really want to have a large range between our minimum price and our base price. So the price that we normally are charging, because if we don't really have a big range there, well, then the dynamic pricing tool can't really do its job. Right? Let's say your minimum price was $200, but you set your base price at $225. There's not a lot of room to move around there. Right. You might as well just go back to using fixed prices. So the idea is that we want to have a big range, but we want to have the right price and at the right time. And so, of course, that's changing throughout the year. So this is a really quick one for you this week. It's basically get into your calendar, check out how many days your minimum price is being offered, and if it's being offered a lot and you're still not getting any bookings, well, then that's pretty clear sign that you're going to need to lower your prices again. You might just need to lower them for that seasonal period, or you might just need to lower them at certain times of the week. We did another episode on different sets of minimum prices. So I know that sounds a little complicated, but we really shouldn't have just one minimum price. Right? We should have a weekend minimum price. We should have a weekday minimum price, and then we should have a minimum price set around certain holidays. And so if you missed that episode, you can go over to str riches.com you can find all of our past episodes there. We even have a handy little AI Bot in the Bottom right hand corner, you could it about minimum prices and it's going to tell you. So go back and check out that episode. And if you want to take this one step further, you can actually go back and pull up all of your historic prices and see how often your minimum price was offered and you didn't get a booking. So if it's any significant amount of time, any pers, you know, let's say it was 10% or it was 15%, that's a lot of days where you were likely priced too high and you could have had more opportunity. Right? So go back and look at that. I know quite a few of you are concerned with maybe lowering your prices too much. You really shouldn't be as long as you have all of those sort of safety precautions in place. So again, we've talked about those a lot on this show. Having cameras, having rental agreements, collecting a deposit, making sure that you're checking your guests, prior reviews, all those types of things. But assuming you're doing that, you really shouldn't be too concerned with lowering your price a little bit more. And if the idea for your property is an investment and you want to maximize the revenue, well, we've got to make sure that we keep that range large between what our minimum price is and our base rate. I mentioned a few minutes ago that we want to cross check this though. So before you just go and lower your prices, it's always good to get a second perspective. And that could be as simple as pulling up some of your competitive properties in your neighborhood on Airbnb. Or if you're using price labs, you can use their comp set features, finding those comparable properties, pulling up their calendar and see what their last minute prices are, see what their prices are 30 days from now or 60 days from now. And if they're much lower than yours and they're also not occupied, well, well then that tells you probably have a little more flexibility or you want to have a little more flexibility with your minimum rate. So again, you can pull up comps to check that. You might consider using another pricing tool to, to compare what you're seeing on Airbnb or compare what you're seeing on your Price Labs reports or your wheelhouse reports, maybe one like key data. So the more information we have, the better strategy we can come up for our short term rentals and the better we can do at making sure we're not leaving money on the table. So to break this all down in a nutshell, just go back and check your historic reservations, see how many of those got booked at your minimum price. See how many days you left vacant that we're still at that minimum price meaning you probably want to have a little bit more flexibility there and remember that your minimum price is going to change throughout the year. It's going to change based on seasonality and so we really just want to have a big range so these tools that we're using can do their job with our oversight and we can maximize revenue with all of our short term rentals. I hope that helped a little bit and until next time I hope you have a fabulous week.
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