Updated: 6/21/2023

Effectively and efficiently pricing your home is the #1 biggest missed opportunity when trying to manage your home. Sometimes hosts think "I'm booked 2 months in advance! I'm doing a great job!" but the unrealized reality is that they are likely under-pricing their home and that if they asked for a higher nightly rate they could have make substantially more money.

If you got $1,000 for the weekend and it was booked 60 days in advance, what if you asked for $1,200? or $1,300? Could you have made more money if you were more patient? And going a step further, what if you required a 3 night stay instead of a 2 night stay? Why book to someone for only 2 nights when you could have been patient and held out for a 3 night stay?

This is at the heart of what we're trying to solve. It's a super fine line between asking for more without being too greedy and loosing the opportunity to get a booking. We not only take a hands-on approach to pricing, but we also enable the help of a sophisticated 3rd party pricing tool called PriceLabs in order to help us achieve this! Let's dig into it!

PriceLabs logo

The Goal - to make as much money as possible! it's pretty simple. That might come in getting more reservations, longer reservations or asking for more money, but we want to get the highest asking price we can!

The Strategy - to price your home the highest we reasonably can without being too greedy (and loosing the opportunity for a reservation). In order to accomplish this, we need to enable a Time-based Strategy.

Think of it this way - if a reservation is 6 months away, we want to ask for more! This might be a higher nightly rate, this might be a longer stay (3 night minimum) but the last thing we want is to get an average booking. Why? Because if we asked for more, we could have got an exceptional booking because we still had 6 months at our disposal! For this reason, we tend to be greedy deep in the future and more conservative as the desired date becomes closer. This is where we enable the help of PriceLabs to create the rules to automatically trigger and enable these sophisticated pricing rules.

How does PriceLabs work? PriceLabs helps in two main capacities:

(1) data signals - PriceLabs plugs directly into Airbnb/VRBO in "real-time" and uses this data to more accurately inform our listings' pricing

(2) time-based rules - allows us to create time-based rules in order to help us maximize revenue

Examples help! Think about the Airline industry - they constantly change the price per seat depending on how empty a plane is, how far in advance a flight is, how many people searched for that flight, and more. We're doing the same thing but for your home! With PriceLabs, we look at those supply/demand signals (and more) to figure out how to price your home.

Let's use the example of Memorial Day. PriceLabs learns from Airbnb/VRBO that there are MORE inquiries than normal and FEWER homes available than normal, so it concludes that if we normally charge $400/night we should probably charge $700/night for this weekend.

It does this across every day and refreshed every single day.

What about minimum lengths of stay? Surely if we increase the minimum night requirement we will get longer stays and more revenue, right?

Not exactly... there are actually quite a few downsides to using a higher minimum length of stay

(1) You're Not Seen - the first step in looking for a home is (nearly always) selecting dates. Seldom is the home found first and the dates are malleable, rather, the dates are picked first and then the home is selected thereafter. What this means is your home isn't being seen to be selected. Your home might check every box on their list of homes, but the future guest isn't afforded the opportunity to even see your home!

(2) Hurts Your Rank - Airbnb wants hosts to have homes that are available for hosting, and their ranking algorithm takes into consideration factors like "clicks" and "click thru rate" (percentage of how often the home is clicked vs how often it is seen). In other words, you want your home to be seen and available, and if it is not, OTA's like Airbnb will deem your home less worthy of being shown high in the search results when it is meeting the search parameters.

The Solution: only in fringe circumstances do we want to employ 3 night minimums and instead making the home available for 2 nights is the smart strategy. However, there's ways that we can help ensure a higher revenue amount, and that is by raising the weekend pricing (on Fri/Sat nights) and effectively baking-in that 3rd night's worth of revenue within those two nights and greatly reducing the cost of the accompanying Thurs & Sun nights. This way...

  • You're receiving nearly the same amount whether they book for three nights or two
  • You're showing up in the search results, so if your home is perfect and their budget is flexible, you still have the opportunity to earn the booking
  • You're preserving your listing's rank by not effecting your underlying metrics (clicks, CTR)

(bonus note, we actually started employing no Sat check-ins/outs but had to abandon that strategy as Airbnb greys out the "Sat" day for check-ins/outs, however, the greyed out feature really makes the home look unavailable for that day in its entirety)

There's no perfect solution when it comes to pricing. That is to say, you're not always going to get the very top amount of money for every single booking every single time. The goal very much becomes how can we be more right and less wrong, and by utilizing the above strategies helps us preserve the upper-limit of making the most amount as possible while preserving the downside by reducing the risk that high-opportunity dates go unbooked.

Now that you understand the broad-strokes and strategy of what we're doing, I wanted to go a step further and give you a look under-the-hood. Truthfully, the best way to do this is to show you, so I created a few videos that go further into these details.

PriceLabs Strategy Video

Please let us know if you have any questions!