Top 3 Airbnb PRICING MISTAKES to Avoid
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In today’s video I outline the three biggest mistakes with Airbnb pricing. These mistakes could’ve cost me $30,000 just this last year on one of my properties. If you manage for others or plan to launch soon, this is required viewing!
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AIRBNB FOR DUMMIES:
Luckily for us as Airbnb professionals, most hosts don’t know what they’re doing.
In AirDNA, it’s easy to see the separation between the top properties and the “also listed”.
When I say top properties, I’m judging off revenue. Revenue, ultimately, is all that matters.
Not occupancy rate. Not average daily rate (ADR).
So how do we get the most revenue, the most money, for our Airbnb?
It’s all about your pricing strategy.
The right pricing strategy earned me an extra $30,000 last year. No kidding. $30k.
Today I want to share the three biggest pricing strategy mistakes hosts make.
Whether you’re a property manager for others or an Airbnb investor, these apply.
And had I made even one of these mistakes, I would be down $30,000 this year.
First, we talk about pricing during the launch. The way we price during launch is counterintuitive. But it pays dividends long term. You can’t miss it.
Second, we go over pricing for occupancy rate. Did you know the goal isn’t to be 100% booked?
I’ll share the true goal and how we measure it.
Third mistake is all about set-it-and-forget-it pricing. Just… don’t do that. We talk about the right way to price your Airbnb in this step.
Hey, what's up guys, it's James here. And in today's video, I'm going to talk to you about the three most common mistakes that I see people make with their pricing on Airbnb, and I'm gonna show you how you can avoid them so that you don't leave money on the table. Now, I am not exaggerating when I say that if I had made even just one of these pricing mistakes, which I'll point out, I would have actually missed out on $30,000 on one single property over just the last year. I'm not kidding, I'm not lying, that is absolutely accurate. And I'll tell you the exact story as far as how that would happen. But, you know, really, there's just so much money that people are leaving on the table when they make these pricing mistakes. So I want to make sure that you don't make them so that you're maximizing the returns on your investment and so that you're maximizing your cash flow, you know, what would it be like, I'll ask you, what would it be like if you had a short term rental property, or if you have one, and you're watching this for you to bring in $30,000 Extra in a given year on just that one property by just following a couple of the right processes, a couple of the right steps and having to know how to price your property effectively. So that's what we're gonna be talking about in this video. Before I dive into that there is a link in the description to a free training on how to invest successfully in short term rental properties. So I highly recommend you check that out, it's linked in the description down below. If you're more interested in managing properties and building a six figure income managing other people's properties on Airbnb, then we've got a training linked in the description down below for that as well completely free, both of them are gonna give you free tools to help you on your journey, free training on exactly the step by step process to do everything successfully. So wherever you're at in your journey, whether you want to manage properties for other people, or you want to start investing in buying some highly profitable short term rental properties, that I highly recommend you check out either one of those two trains that are linked in the description down below. Like I said, they're completely free their limited time, so make sure you check them out. Now let's jump into it. And stock a talk about mistake number one, which is pricing your property too high during the launch. Now a lot of people they have really high ambitions for their property when they first launch it on Airbnb. And so what I often see people doing is they price the property quite high, and then the lower the price over time in order to fill in the gaps. Now you actually should be doing the exact opposite of that. And the reason for that is because when you first launch your listing, Airbnb knows that you don't have a lot of sort of benefits to your listing that would attract guests to book it. Because you don't have reviews, you've probably you know, don't have your listing optimized, because you're brand new, there's just things that you can improve on. And so because of that, Airbnb wants to give you an initial boost of traffic to sort of help you out in the initial period, because if they didn't, then you would just fail as a host. And they as a company would fail because it would be really hard for new hosts to get started. Now I've talked about this on on previous videos in great detail and gone into it. But ultimately, what you need to know for this is that when you are first launching Airbnb gives you a boost of traffic. And depending on how well you convert that traffic, that's going to determine where you end up in the search results long term on Airbnb, if you convert more of that traffic that they give you early on, then you will end up higher up in the search results. If you convert less, you'll be lower in the search results. So the challenge is that if you price your property high to start with, and then lower it down over time, then you're going to convert less when Airbnb is giving you that initial boost of traffic. And that means you're going to show up lower in the search results, what you actually want to do is the exact opposite, I always recommend to people to really understand what their property is worth and what they should be pricing at. And then price anywhere from 10 to 20% lower than that when they first launch it to get as great at conversion rate as possible. So they end up higher in the search result. Yes, they will be giving up a little bit of money in the short term in order to give those discounts. But the payoff long term is going to be absolutely massive, because they're going to show up higher in the search results, get more traffic to their listing and get more bookings long term. So that's mistake number one, you definitely want to avoid mistake number two is trying to get fully booked, I see a lot of people sending their prices in a way that's going to get them 100% occupancy. And doing so really kind of steps over the idea that you know, really the way that you maximize your total revenue and your total return is not just by getting to 100% occupancy, it's by finding the optimal balance between your occupancy rate and your 90 rate that is going to yield the highest return the highest amount of total monthly or annual revenue. For example, I always tell people and I use this kind of hyperbolic example. Just to illustrate my point is that I would rather have my property booked only one day per year. It as opposed to having a book 365 days a year, as long as that one day book for $150,000. Right. Now, obviously that's not going to happen. But the same kind of principle, the same concept applies. You wouldn't you're not aiming for getting every single night of your property book. You're aiming for that optimal balance between a high nightly rate and a high occupancy rate. So now generally speaking, the higher your nightly rate goes, the lower your occupancy is going to be. But that's not necessarily a bad thing, it means that you're still going to optimize your revenue if you do it the right way. And you're gonna have less wear and tear and less expenses on your property, because there's going to be less turnovers, everything like that. And so you just have to understand the goal is not to get fully booked, the goal is to find that perfect balance to use data to set targets. We have, like I said, different pricing tools we use if you want access to our specific pricing strategy and our specific pricing tools that we use, in order to figure out what those goals are during different seasons of the year for different properties all over the world, and how we optimize to hit that, then again, the link is in the description down below for that free training, it's going to walk you through that step by step. That's mistake number two. Now, mistake number three, this is the one that had I made this mistake in the last year, I literally would have walked over $30,000, I would have lost out on a completely on just this one property. And I'll explain why. So this third, this third pricing mistake that I see you will make all the time, it's probably the most common one out of all of them is set it and forget it pricing a lot of people, what they do is they set their pricing out into the future. And they basically forget about it until two months out one month out. And a lot of cases, they leave it until just a couple of days or a couple of weeks before that that opening in the calendar. And then if they see that two weeks from now or a month from now, they have vacancy in their calendar, then they'll drop their rates dramatically. And what you do there is you set your prices high, or you set them too low, but you don't actually look at what you're doing. And you know, you don't actually get to see if your prices are too low or too high until it's too late. If you ended up setting it the first time and you set it too low, then you don't have any mechanism in place. If you're just forgetting about it until a little bit before, you don't have a mechanism in place to realize, oh, wow, my pricing is too low, I should increase it. And then if you set it too high, then you don't have a mechanism in place to go, oh, wow, I've set it too high, I'm going to make a small adjustment, two months, three months, four months in the future in advance, as opposed to making a large adjustment really dropping down the rates dramatically a couple of weeks out. So I see this mistake being made all the time. And this year alone on one of our properties, we would have lost on $30,000 Had we done this. And the reason for that is because we ran analysis before buying the property. And we knew that our best case scenario for this property was about $120,000 per year in total bookings, good scenario would have been $100,000 best case scenario was $120,000. Based on the data that we looked at. Now Little did we know everything going on with a pandemic was going to happen. And that was going to send a surge of traffic to this listing. It's a it's a listing that is very, very attractive for local kind of domestic travel. And so because people weren't able to travel internationally, a lot more people traveled domestically. As a result, there was way more demand for this listing than we anticipated. And it ended up bringing in $150,000, actually over $150,000 in its first year. Now, how do we not realize that how have we not actually been looking at the occupancy rates of our property. And knowing that we were on track and pacing ahead of our goal, and that we needed to increase our rates, we would have just left the rates of what they were. And we would have left that extra $30,000 that we were anticipating on the table, it just wouldn't have gotten captured. And the only way we're able to do that is by having the right tools and strategies to constantly be monitoring our pricing. Now, when I say constantly, I'm not talking about being Hawking over your pricing all the time, we literally only go in there once a week for 30 minutes to check on how we're doing an update our rates. But that's so much more than what the average host does. And that's why we were able to capture all of that additional demand. And so again, you want to access all the different tools and strategies for how to do this. There's trainings linked in description down below. They're gonna walk you through it step by step by step whether you want to apply this to your own short term rental investing where you're going in buying the properties or if you want to manage other people's properties, help them increase their returns and get a percentage of their revenue for doing so. Either strategy is fantastic right now because Airbnb is absolutely booming demand for Airbnb and short term rentals is booming. Airbnb as a company is investing heavily into improving their product. Everything is sort of a perfect storm going on right now that is causing Airbnb to have absolutely insane numbers, whether you're managing or whether you're investing. So whatever path is best for you, I highly recommend you check out that free training is linked in the description down below. Make sure you check that out, get the free resources, get the free tools that we're gonna give you to help you on your journey so that you can shortcut your path to success and really achieve some fantastic results. If you liked this video, if you think this is gonna help you to avoid some mistakes in the future. earn more money on your Airbnbs on your short term rentals. Make sure you hit that thumbs up make sure you give this video like it does help me out a great deal with YouTube's algorithm and with helping to grow this channel. So please give me a like, give me a smash on that like button. And then also just if you have any questions, comments, thoughts Anything you want to share? You want to pick my brain on? Let me know in the comment section down below. I'd love to hear from you. I'd love to get your feedback. Let me get your thoughts. With all that being said, Oh, I guess one last thing, make sure you subscribe to the channel as well. We're just growing this channel. 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