Price it Right- Airbnb Pricing Strategy

Are you running a vacation rental business or, trying to fill that spare bedroom or, have you listed your property on the Airbnb website just out of curiosity? Whatever might be your reason for listing, if you are not implementing a proper Airbnb pricing strategy, you are potentially leaving money on the table and may not profit well from hosting guests. 

The idea of hosting on Airbnb sounds simple, but to make profits requires a dedicated approach in the long run. Unfortunately, several beginners assume that renting a property with the help of Airbnb is simple until they actually do it. 

One of the tricky parts while running an Airbnb business is managing your pricing. It directly impacts your bottom line.

How to Manage Airbnb Pricing?

You can choose one of the following methods or combine all of them to get the best pricing of your property listed.

  • Airbnb Smart Pricing: Airbnb has its in-built “Smart Pricing” algorithms that calculate the price of your property based on various parameters. While this seems like an obvious choice, in theory, many hosts complain that it doesn’t work for them and cannot be trusted blindly. Thus, they have to resort to doing their research, which is our following approach here.
  • Manual Pricing: As many hosts disagree with Airbnb pricing recommendations, the next step is to explore the market and research using the Airbnb website to figure out the rental rates in the locality or using a market analytics tool like market dashboards. This research takes time, but you are in control of the pricing. If you are instead looking to automate your pricing strategy, a lot of hosts choose rate automation which is the next approach.
  • Pricing Automation Software: To apply your rate strategies daily, you can use specialized software products such as PriceLabs. PriceLabs is a dynamic pricing tool for Airbnb used by thousands of hosts. PriceLabs analyzes several data points to identify price points for your listings. Further, your prices are automatically adjusted every 24 hours.

How Does Airbnb’s Smart Pricing Work?

Airbnb has its algorithm to suggest prices for rentals but they have not been very public about how Smart Pricing works. However, Airbnb has access to data most hosts don’t, so it is expected that they can build a comprehensive algorithm. To recommend prices, Smart Pricing is likely to use data points such as supply and demand in your area for a date, the health of your listings, review count (superhost status), days remaining to book, amongst others. 

Based on all of the above factors, they will come at a price point for your listing for every given day. This is a great starting point, but as we said earlier, several hosts have hit and miss with Airbnb’s Smart PricingMany have recommended that if you use Smart Pricing, there is manual intervention required.  

Pricing Strategy for Airbnb or your vacation rental:

So you might have decided to use Airbnb’s Smart Pricing, manual pricing, or you are using a dynamic pricing tool like PriceLabs. But to be in control of your revenues, you need a pricing strategy. Below, we have summarized six simple pricing strategies to help you maximize profits from renting your properties.

1. Maximum occupancy strategy:

What you want to ensure is that you have a booking for every available night in your calendar. So you lower your prices enough so that you always get a booking. In addition, it would help keep tabs on the competition to make sure you are priced well under the market. 

How to apply

You probably want to price yourself at the low end of the market. Also, note that to maximize your occupancy, you may not want to put stay restrictions in place, or you might impact your occupancy for gap fills. If you do choose to have stay restrictions, this requires a slightly more complex pricing strategy. Next, you want to get a sense of where the market is pricing itself. You can do this by:

  • Opening an incognito window in your chrome and looking at the competition on Airbnb
  • Or, Using a market data tool like PriceLabs Market Dashboards to monitor competition’s future rates. 

Once you have decided where you’d price yourself compared to the market, you can either manually adjust your pricing or adjust your base price if you use a dynamic pricing solution


  • Ensure that you will have a stable income


  • This could be a lot of work for potentially reduced profits as you are hosting every night.

This strategy works best for

  • Individual hosts relying on Airbnb as a primary source of income.
  • Property management companies who have a fixed lease model and have been able to obtain properties at low rates

Pro-tip 1: Note that this strategy can still yield better ROI than long-term rentals. So property managers may want to pay heed to this one! First, however, determine profitability by looking at the cost of operating a short-term rental business.

Pro-tip 2: If you are looking at competition manually, don’t be confused by the initial price Airbnb shows. You’ll have to open the listing calendar to see the actual costs for each date. 

2. “Get the maximum rate” Pricing Strategy for Airbnb:

As the name suggests, you are looking for absolutely the best rate you can get for your listing in this strategy. You are looking to maximize profits from each booking in this case. This strategy works best to get the maximum juice from high-demand days. You’ll make the most money at peak times – summer for vacation markets, big ski weekends for ski resort destinations, festivals for festival destinations. Frequently you can get much, much more than you think: don’t let your own bias influence your rates. You’re anchored to a lot of prices – especially your monthly mortgage or lease. It may seem ridiculous to rent a place that costs you $1500 a month for $1000 a night – but you might be able to! 

Similarly, bias about “normal” pricing can also be a hindrance. Five hundred dollars a night for a dumpy two-bedroom that usually rents for $125 seems ridiculous until everything else is booked for a festival, and four friends split it for $250 each for a weekend ($500 a night) instead of staying in a tent. It happens all the time. 

How to apply

You want to identify the high-demand days in your market and monetize those by charging high prices for those days. First, look at properties in your vicinity that are moving their prices, so you’re sure they’re actively managed, and see what they charge for peak times. This is called your “comp set”. Then, decide whether or not your place deserves a premium to the comp set, and what your risk tolerance is for it not being rented, and set your price. If your listing is superior, be at the high end of the comp set – or above it. You can do this by:

  1. Opening an incognito window in your chrome and looking at the competition on Airbnb
  2. Or, using a market data tool like PriceLabs Market Dashboards to monitor competition. 


  • You will spend less time managing the business.
  • You will make high profits even with less fill rate.
  • Fewer guests mean fewer problems to deal with.


  • Your property needs to be at the best possible location or unique to get adequate bookings.


Imagine you own an exquisite apartment in a popular location. This lets you be in a position where you can bump up the price and charge more than the average to attract only high-paying guests.

This Strategy Works Best for?

  • Premium and unique property owners

3. Right Minimum Stay Strategy 

A key aspect of increasing your revenue is getting bookings that are longer at peak times. For example, if you let that Festival Saturday get booked as a 1-night stay, you might have missed out on Thursday, Friday, and Sunday nights around it – or even the entire week. For drive-to vacation markets, this can be crucial to overall returns. 

How to Apply

For drive-to destinations, you don’t want that 1 night weekend stay, and maybe for peak seasons what you really want is week-long bookings. Understand how long do guests typically book property for in your market and try to be on the higher end of the window.  If you compete with hotels in a more business-oriented market, you’ll probably want to keep your minimum stay short – 1 or 2 nights. Many vacation rental operators avoid 1-night bookings because of the risk of parties, so 2 is a safe starting point. You can use a market data tool like PriceLabs Market Dashboards to monitor the common length of stays in your market. 


  • Ensures that your property has bookings for the maximum number of days.
  • Avoid bookings made for partying
  • Avoid missing out on bookings during peak seasons


  • Your listing might not appear for booking search for smaller days if you have more minimum stay requirements.


Larger homes commonly require an extended stay. Travelers usually pay a substantial cleaning fee for a bigger property and travel with a huge group for a specific event (spring training, bachelor/bachelorette, family reunion, festivals, etc.). These logistics imply that more extended stays are preferable for everyone.

This Strategy Works Best for?

  • Premium property owners
  • Property Managers with unique properties 

4. Gap Nights Strategy 

Longer stay requirements come with a huge drawback: Gaps. Usually known as “orphan nights,” these gaps are unbookable periods falling between two long, very desirable bookings. 

How to Apply

The Orphan Nights feature of PriceLabs will automatically find these gaps and lower the minimum stay requirement for each night so you can maximize your booked nights. You can also do this manually by checking once per week or whenever a new booking comes in and adjusting the calendar manually. Stay vigilant! At $200 a night, that 4-night gap is worth $800–13% of your potential revenue that month! And it’s even worse if it’s peak time. Making the right decisions in STR business might take some time and effort from your side.


  • Maximize bookings for the month, in turn maximizing revenue generation.


  • It can be a time-consuming process if doing it manually.


For example, you have a minimum of 5 nights required for bookings in August. A guest checks out on the 5th, and the following guest checks in on the 9th. If someone searches for a 3-night stay on the 5th, your unit will not appear in searches. This is because you’re “not available” – that’s a 3-night booking, but you require 5. By changing the minimum night requirement manually or automating this task through PriceLabs, you will be able to book those nights.

This Strategy Works Best for?

  • Property Owners that are devoted to maximizing their revenue from their Airbnb property. 
  • Property Managers with bigger teams to keep track of these booking gaps.

5. Long-term Rentals Pricing Strategy for Airbnb:

This Airbnb pricing strategy is also referred to as lazy hosting by many Airbnb hosts. As many people nowadays get opportunities to work abroad, instead of renting an apartment, they can stay at an Airbnb apartment for the long term. Your rates will be listed weekly or monthly, and you will deal with the same customer for a longer duration. Remember to get a lease agreement signed as well.


  • It takes away the stress of finding new guests to rent the property frequently.
  • It reduces the effort of managing the place.


  • You may need to list your property on other platforms as well, other than Airbnb.
  • This renting strategy generates less profit.
  • You will have to get the rental agreement signed, which becomes an additional burden.


Let’s say you own a property in New York, but you are moving to another city for a few years because of your business engagements. Naturally, you do not wish to sell your property, but just letting it empty will only be an additional burden. In addition, renting it nightly is a lot of work, for which you may not have time. So instead, you can rent it long-term so that the property gets used and you generate some profit.

This Strategy Works Best for?

  • It is suitable for investment properties that are situated in highly regulated vicinities.
  • Owners who live abroad.
  • Traditional property managers.

6. Dynamic Pricing Strategy

This particular Airbnb pricing strategy is applied to target maximum revenue by implementing all the above-discussed strategies combined to achieve a high fill rate and maximized profit.

How to Apply

You can use PriceLabs Dynamic Pricing Solutions to customize settings and automate pricing strategies to maximize your revenue. 


  • High fill rate
  • Increased profit


  • It is time-consuming, and you need to make dynamic decisions.


For example, if you are a property owner, you find that your rental is almost occupied during peak season, but during other times, it may not be much in demand. Analyze the season where you find fewer guests and focus on getting a long-term guest to stay during that period. As soon as the high-demand season starts, you can switch to a maximum fill or maximum rate strategy to increase your earnings. 

This Strategy Works Best for?

  • A larger team that can manage to switch between strategies.
  • Individual hosts who are entirely devoted to the business.


If you’re still reading, you are more aware than most people ever will about managing pricing and bookings at your rental or rentals. Nothing can have a more crucial impact on your success as a host, for less work or cost than being vigilant and intelligent with pricing.

Figuring out an Airbnb pricing strategy is not that simple as there are several ways to go about it. You may require trying to test a few of the methods mentioned above before figuring out the one that brings you maximum profits. You can understand by now that you need to leverage a tool to at least comprehend your market. Using tools like PriceLabs is going to facilitate you to analyze the market. In addition, you will learn about significant events, high and low seasons. 

Make sure that you are making informed decisions. 

Our team shares trends we are seeing & actionable advice for property managers and vacation rental owners!

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