How To Airbnb

All About Pricing on Airbnb

Airbnb pricing

Being a host on Airbnb truly is a multi-task job. You will have to perform dozens of various tasks all the time to get things running well, but it will all be worth nothing if you can’t manage your price properly. Pricing is an essential aspect of any Airbnb property, so as an owner, you should put special effort into mastering it.

The best way to develop a sustainable pricing strategy is to research and try. In this article, we will explain the basics of pricing on Airbnb, as well as review three ways of managing your prices on Airbnb in detail.

How does pricing work on Airbnb?

When entering a platform like Airbnb, it is important to know its rules. Thankfully, the vacation rental business is not very different from most other businesses in terms of pricing. The platform offers fair and clean competition, which is good news for you, as you will be able to enter the market with a smart pricing strategy. The final price of a listing is formed depending on many factors, so let us review them one by one.


Location is one of the key factors of price, which is a concept almost everyone is familiar with. A hotel on the beachline is more expensive than the one 15 minutes walk away from the sea. Sometimes, the location may drive the price even more significantly than almost any other factor, but the cost of such an estate will usually be corresponding.

Property and Amenities

The property itself also plays a huge role here. Logically, renting an entire house will be more expensive than a small apartment nearby. The same goes for amenities: the better the conditions at your property are, the higher can be the price. However, it does not necessarily mean a house full of amenities will bring you higher profits than a small apartment.

Target Audience

The people you’re going to rent out your property are also important to consider. Business travelers will usually be ready to pay more in case your listing fits all their needs. Choosing the category of guests you’ll be aiming for is essential to running a successful business.

Your Own Costs

Your own costs and expenses are other major components of the final price. This category includes a ton of entries, starting with your mortgage payments and ending with utility bills. Your expenses should be thoroughly calculated before launching the business, to determine the lowest price you can afford renting out the property.

Prices of Competitors

As we have mentioned, the competition is pretty fair in this industry, meaning you will need to keep up with other entrepreneurs in your area. Nobody would book your Airbnb, in case there is a similar listing twice cheaper nearby. Make sure to browse through all the similar listings before you launch to understand the guest’s perspective.


Of course, the demand will be a crucial parameter of your listing’s price. The only way to keep the business successful is to adjust your prices accordingly. At first, you will need to lower the price a bit to get your first guests. Then, you will need to adjust it depending on the number of unbooked days you have. It is also important to remember that the business is mostly seasonal, which implies correcting the prices accordingly.

The Three Ways of Setting Your Price

Airbnb price strategy

In general, there are three options available for you to manage the prices. You can either change them manually, adjust them using third-party software, or use the built-in Airbnb Smart Pricing tool. We will review all these options separately in order not to miss any important details.

Manual Pricing

The name of this option speaks for itself: it implies that you will set the price and manage it yourself. The process is pretty straightforward, as it does not require you to use anything rather than Airbnb itself.


  • You will always be aware of the price of your listing.
  • You will be able to follow your strategy.
  • You will still be able to use the smart tips of Airbnb anytime.
  • It allows you to try setting different price levels and analyzing the resulting demand.


  • It requires your constant attention.
  • Beginners usually fail to develop a successful strategy right away.
  • It requires a lot of analysis.

Who should use it?

Even though most entrepreneurs prefer other options, taking over the manual control of the price levels of your listings is not always a bad idea. Taking into account it can be combined with any of the methods we’re going to mention further, it is a great way of adjusting the price when facing any unprogrammed situations.

Otherwise, it is hard to recommend using this option. There are many misconceptions about smart and automation pricing which may scare some beginners away, but most users know that all these tools are highly customizable. With them, you don’t give away the control over your prices, you just allow the programs to adjust them according to your own strategy.

Thus, you will be able to change the prices the same way you would do it manually, but without doing the tedious work and having to refresh the booking calendar ten times a day. An Airbnb host has a lot of other tasks to do!

What should you take into account with manual pricing?

Setting up a price manually is easy: you just need to enter the number to the corresponding field of your listing’s settings. However, setting up a price that would bring you a high demand while keeping your enterprise profitable requires a lot of research and effort. To develop a successful strategy, you should take into account all the factors we have mentioned in the previous section.

Moreover, if you choose to control the prices manually, you will need to keep up with the demand all the time. For example, when you see a couple of days unbooked in your calendar, you will have to lower the price so as not to miss these days at all. Or, in case you see that your listing is booked all the time, you should try increasing the prices. Long story short, you will need to be ready for any situation and react accordingly.

Automation Software Pricing

In case you didn’t know, there are many platforms like HostyApp that allow you to let programs do the pricing. However, it does not mean you will get a decent pricing strategy out of nowhere. In fact, you will have to teach the program to follow your strategy. 

The toolsets of such sites allow you to create very detailed algorithms, which is essentially the same as managing your prices manually, but without the repetitive work involved. You have to set them up once and let the program do your job. Of course, you will be able to take over the control anytime to set a price manually. Moreover, you will always be able to adjust the algorithm you’ve entered.


  • You won’t need to monitor the prices all the time.
  • You will be able to follow your initial strategy.
  • You will be able to adjust and control your prices all the time.
  • You will be able to set very specific algorithms for pricing.


  • You will need to learn how to use automation platforms.
  • Such platforms usually require a paid subscription to use.
  • Creating a successful algorithm still requires a lot of research.

Who should use it?

Essentially, automation software can be used by any property owner on Airbnb, as it allows you to set very specific and precise algorithms for your price models. You won’t benefit from it only in case you have a fixed price that you are not willing to adjust under normal circumstances, which is an exceptionally rare case and something you should not generally do.

However, whether the effort of setting up such an algorithm is worth the effort and the money is a whole other topic. Even though the interfaces of automation software platforms are user-friendly and rather intuitive, you will still need to get along with them to develop complicated algorithms. Moreover, the software is not free to use.

For advanced hosts that have multiple listings on Airbnb, using such software is almost inevitable, as manually managing the prices of many properties at a time is almost impossible. For beginners and hosts that have only one active listing, using the software is not necessary. However, it will surely save you a decent amount of time, so the decision should be individual. 

You can try managing the prices manually at first, as it will let you make the decision easier. Moreover, most automation software platforms offer free trials, which we strongly recommend trying. After the trial period, you will know whether it is worth the subscription for you. What is even better, most automation software platforms offer lots of additional features that are included in the subscription. Such features could include:

  • auto-messaging
  • auto-reviews
  • auto-publishing
  • automatic calendar synchronization
  • many other advanced features.

What should you take into account with automation software?

As we have already mentioned, with automation software, you are the one to develop the pricing strategy. This means you will have to take into account all the same factors we have reviewed in the first section of this article. However, there are some additional parameters you will have to consider with such software.

Firstly, there is the time you will spend learning the software and creating your first algorithm. It will surely save you a lot of time in the long-term perspective, but if you have too many other tasks, you can try starting with a manual price and leaving the software for later. The best option is to learn the software before you even launch your business so that you won’t have to deal with it in a rush.

Secondly, there is the data you’ll need to develop a successful strategy. Unfortunately, even the most thorough analysis will never be 100% accurate, and you will have to adjust things according to the demand. What’s even more unfortunate is that you won’t have any data on your listing’s performance until you actually launch your business. As an entrepreneur, you should be ready to react and adjust your algorithms quickly, especially, during the first few months since your launch.

Lastly, you will need to mind the subscription fee. It is usually from $5 to $20 per active property per month, so it won’t be a major hit on the budget for aspiring entrepreneurs, but we still had to include it to have the full list.

Airbnb Smart Pricing

Smart Pricing is a built-in feature available on Airbnb. You can use it right on the platform without visiting any additional websites or paying subscription fees to any third parties. The idea of this feature is to help the users adjust their prices properly by providing them with a suggested price tag.

This suggested price is generated by the platform based on a set of parameters gathered and analyzed by Airbnb’s algorithms. The list of these parameters includes your room type, the demand levels in your area, the quality of your listing, your booking calendar status, as well as some stats of your listing and profile.

As for the price control, you will be able to set a minimum price you can’t afford to go lower as well as an upper limit for the booking price. Moreover, you will be able to turn the feature on and off when needed.


  • The tool analyzes information in real-time.
  • It gathers data directly from Airbnb.
  • It takes into account your personal stats.
  • It allows you to limit the price ranges.


  • The system is still imperfect in terms of assessing the quality of your property.
  • The algorithm is designed to maximize your bookings, not your profits.
  • Sometimes, the tool fails to adjust for seasonality.

Who should use it?

Just like automation software, the Smart Pricing tool can turn out to be useful to almost anyone. It has some unique advantages like an analysis of your stats and listings in your area, which is not something available with the other options.

However, it should not be considered a magic wand of price management. Even though it provides some great benefits, you should not rely exclusively on this feature due to its drawbacks.

You can try using it, as there is always an option to turn it off. It is a great way to check whether your prices are objective. Another way of using it relates to the general purpose of the feature. It is oriented toward maximizing your bookings, so you can activate it for the time you need a constant flow of guests rather than a maximum efficiency.

What should you take into account?

As with all the previous ways of managing the price, you will still have to take into account all the factors of price formation to properly configure the limits for the feature. As the tool does the job on its own, the only other thing you have to consider is that it is not always objective. Make sure to double-check the prices it is setting, especially if you know a seasonal rise in demand is upcoming.

Read also how to be an Airbnb superhost without meeting your guests.

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