How to Price your Short-Term Rental: A Guide for Successful Pricing
Renting out your property on a short-term basis can be a great way to make some extra money. But before you start, it's essential to take the time to price out your short-term rental correctly. The price of your property should be high enough so that it's profitable but low enough so that the cost does not turn potential guests away while still being competitive with other properties in the area.
By finding the right pricing strategy, you'll be able to increase your rental income and maximize your bookings. There are two distinct ways to price your home: pricing it yourself or using an online tool. We'll discuss both methods to help you find the right price for your rental home.
Pricing Your Short-Term Rental by Yourself
If you want to price your short-term rental yourself, you'll want to make this decision based on accurate data instead of trying to guestimate based on a similar rental down the street. Follow these steps to figure out your ideal rental rate.
1. Add Up Your Monthly Expenses
If you want to make sure your short-term rental is profitable, do the math first. You'll need to factor in all of your monthly expenses, including mortgage payments, utilities, tax, vacation rental insurance (also known as Airbnb insurance or short-term rental insurance), housekeeping, and maintenance costs. Perhaps most importantly, do not underestimate the value of your time as you are making pricing decisions and work through the pricing process. Your time is incredibly precious; take the time to consider what your time is really worth. This is the minimum amount of money you need to break even. Once you make more than that minimum cost, you'll be making a profit.
2. Evaluate Your Property
Be honest about your property. What benefits do you offer that other rentals don't? Conversely, what are the drawbacks of your property? For example, having a hot tub, BBQ grill, or fenced-in-yard are all positives that help your property stand out. However, lack of parking, worn-out furniture, and a location that's far away from attractions can lower the value of your rental.
3. Research Prices of Similar Short-Term Rentals
Research prices of similar short-term rentals in your area to see what they charge per night. Keep in mind that rates vary by location and by vacation season, rental amenities, and size/type of property, which is why it's essential to find rentals similar to what you offer.
4. Take Into Account Holidays and Peak Seasons
It's important to take into account holidays, weekends and peak vacation seasons when pricing your short-term rental. This is because more people travel during these times, which in turn means that there will be a higher demand for rentals on the market, and more profit for your short-term rental to make. You may also consider a higher minimum night stay during these times.
5. Re-evaluate Frequently
Unfortunately, you can't just set your rates and forget about it. Instead, you'll want to keep an eye on how much your rental is booking, the current competition in your market, and any local events that could impact the booking rate. Then, make sure to make adjustments accordingly so that you can maximize your booking potential and revenue.
Short-Term Rental Pricing Software
Pricing out a short-term rental by yourself can be an exhausting process because of the research and time it takes. However, there are tons of short-term rental software and tools that you can use to help you make the right pricing decisions. Here are a few of the most top-rated software you might want to consider checking out.
Outswitch
Outswitch is an excellent beginner management tool for increasing your revenue. It not only shows you occupancy and revenue forecasts, but it also helps to show the nightly average costs of short-term rentals in your area up to a year in advance by pulling data from homes similar to yours.
Price Labs
Price labs provide analytics for vacation rental managers. It's a quick, easy-to-use tool that helps you make your revenue decisions and adjust prices accordingly by tracking historical data from nearby hotels and listings.
WheelHouse
WheelHouse is a vacation rental management software that specifically assists short-term rental property owners with the process of finding their target price point. It's affordable and easy to use while also helping you optimize pricing based on occupancy rates from other vacation rentals in the area.
Beyond Pricing
While many other short-term rental pricing software will only provide you with the data to back up the price you should list your home, Beyond Pricing takes it a step further. When you use this program, it will automatically update your listings on Vrbo and Airbnb to ensure that you're charging the right amount every night and maximizing out your listings.
Finding The Right Price for Your Short-Term Rental
Pricing a vacation rental property can be challenging because there are so many factors to consider. However, with the help of short-term rental software and through conducting your own research, it's easier than ever before for you to find your target price point for your short-term rental.