Airbnb Pricing Strategy for your Airbnb Management Business: Master Class Summary

Find out about different Airbnb pricing strategies and how they work for Airbnb hosts. Master class on Pricing summary prepared by iGMS.

Without a shred of doubt, Airbnb pricing is amongst the most critical components that you have to take into consideration in order to ensure that your short-term rental property is fulfilling its potential. However, when it comes to pricing optimization for vacation rentals, the truth is that this is a challenging task which requires a lot of forethought and consideration. This is where we step into the picture.

We received a significant amount of questions revolving around pricing strategies on behalf of our clients. This is why we decided to organize a master class to shed some light on Airbnb pricing questions. We also invited a true expert in Airbnb pricing, Ian McHenry, CEO of Beyond Pricing. The online event was held on June 29th. For sure, not everyone who is interested in the topic could attend. So, if you are one of these people here is all the summary for you.

Before we feature major takeaways from the master class, let us share with you the presentation and the recorded video below.

Sharing economy and Airbnb dramatic growth

Let’s start with some simple statistics. As of right now, Airbnb is active in 191 countries as well as in over 65,000 different cities throughout the entire world. Only in the US alone, there are more than 200,000 listings available for travelers.

airbnb pricing tips

It is predicated on the methodology of the sharing economy and it is taking advantage of the decaying hotel model. There are over 160 million guests who have arrived throughout the time for which the company is working to all of the properties on Airbnb.

Of course, it wasn’t always like this. The incredible story in one picture is here for you.

The company is currently valued at about $31 billion, which is $21 billion growth for the last 3 years. This is something absolutely incredible. It is also true that it is based on the fact that the hotel business is currently in a serious decay.

For the last few years, hotels are losing an approximation of $450 million every single year in direct revenues to Airbnb. This is significant when you come to think of it. Interestingly enough, the cities which have most Airbnb listings are actually scattered throughout the entire world.

Airbnb pricing tips

Leading the chart with over 78,000 listings is Paris followed by London with 42,000 and NYC with 40,000. This shows that the company’s capabilities far outreach the local boundaries and spread throughout the entire world.

It is quite obvious that Airbnb is growing at fast rates, so are the opportunities that it provides you with. However, you need to understand that vacation rental business is no walk in the park.

And, when it comes to it, establishing a sound Airbnb pricing strategy is definitely important. In this article, you will find a few comprehensive options that you can take advantage of. We are going to take a look at all of them one by one with pros and cons of each one so you can decide whether or not it is applicable to your short-term rental business.

But before we get to it, let us take a look at some examples which are going to provide you with an overview of common pricing practices in the industry.

Airbnb Pricing Optimization on 3 Cities Examples

The cities that we’ve decided to take as examples are New York, Vancouver, and Los Angeles. All of them have seriously increasing indications in a number of listings. Just take a look at the following graphs.

Los Angeles

Airbnb pricing Los Angeles

  New York

Airbnb pricing New York


Airbnb pricing Vancouver

It’s certain that such a tremendous growth definitively pictures a tendency in all cities where Airbnb business is present. You can double check all the facts on the AirDNA site.

There you can find the full statistics for your city.

Another research we’ve done is on additional fees and discounts that Airbnb hosts implement. Below are some major points for you to note.

Cleaning fee

An approximation of 86% of the hosts are actually applying this fee. The cleaning fee is part of your Airbnb pricing optimization and it is important to implement it properly and conveniently.

Security Deposit

About 59% of Airbnb hosts require a security deposit. This is obviously something that you shouldn’t be afraid to do. A lot of managers are scared whether or not they’d fend off their potential clients but the truth is that it’s better to be safe than sorry.

Extra Guest Charge

Here, the numbers are a bit lower as 44% of the hosts charge additionally. It might be a bit pressing to do so but then again, it will depend a lot on the type of property you are renting out.


When it comes to weekly discounts, hosts are averaging 17% off the booking rate and 28% off the booking rate for a monthly discount – keep this in mind.

Being aware of these numbers is going to provide you with clear parameters to maneuver as this is obviously what’s acceptable and established on the market.

Airbnb Pricing Strategies

As promised, we are going to provide you with a few different pricing strategies in order to ensure that you are on the right track with your Airbnb pricing optimization. With this in mind, let’s have a look.

  1. Maximum fill-rate

This strategy entails that you do your best in order to be competitive when it comes to the pricing. In order to do so, you have to provide at least the same value as your competitors. In other words, you want to squeeze out the absolute maximum in terms of filling your rentals.


It guarantees that you will have a good fill rate

This relates to a stable income


It requires a lot of hard work, dedication, and serious attention

Your nightly price is going to be lower than what is actually average

Example: the situation when you have a gap period of a few nights. Your average price could be $100 per night but in order to get the gap period cleared and filled, you will lower the price to $15.

Who is this good for?

  • Individual hosts
  • Airbnb hosts which are capable of fully focusing on the Airbnb management
  • Businesses – these are vacation rental management companies

  2. Maximum Rate Per Night

This is another known Airbnb pricing optimization strategy which comes with its pros and cons. It is going to require you to set visibly higher rates in order to increase the overall net profit from a single booking.


  • You spend a lot less time on managing the business
  • Fewer bookings means that you would have fewer problems to deal with
  • You are making a good profit even if you have a fill rate of less than 50%


  • Lower fill rate
  • The home needs to be absolutely unique

Example: you own an exquisite apartment at a very attractive location. You can afford to bump up the price a lot more than the average on the off-chance that you attract only high-paying guests.

Who is it good for?

  • Premium-class property owners
  • Unique vacation rentals

  3. Long-term rentals

This is usually something that a lot of Airbnb hosts refer to as lazy hosting. It predominantly relies on the premise that you would be able to host out your rental for a longer period of time. You will be renting out at monthly rates and deal with the same customer for a longer period. There are serious advantages and some cons as well.


  • This Airbnb pricing strategy will lower the management effort
  • It is also going to lower the risk when it comes to highly regulated and in-demand locations


  • The listing needs to be exposed on platforms other than Airbnb as well
  • This type of renting strategy also generates less profit
  • You will have to sign a rental agreement which is an additional burden
  • There are likely to be show-ins before the accommodation. This is something common

Example: you are the proud owner of a great apartment in NYC but you need to move out for the next 2 years due to business engagements. You don’t want to sell your property but you want to make some profit. Long-term renting is the most obvious and convenient option in this regard.

Who is it good for?

  • It is suitable for investment properties which are located in areas which are highly regulated
  • Hosts who are out of the country
  • Traditional property managers

  4. Balanced Airbnb management

This particular approach targets the earning of maximum revenue by using all of the aforementioned strategies. This is going to provide you with a maximized profit as well as high fill rate. At least that’s the idea.


  • High fill rate
  • More active
  • The best way to make a lot of money on Airbnb


  • It will make you a lot more involved with other people
  • It is absolutely time-consuming

Example: let’s say you are a property owner and you want to enhance your earnings. There are certain seasons which are not as in-demand. This is where you want to focus on signing long-term deals in advance to make sure that you have no gaps. However, as soon as the hit period starts, you can increase the prices and move out the long-term deals and start using the maximum rate or the maximum fill-in strategy, depending on the situation.

What is it good for?

  • Larger business who have a team
  • Hosts who are absolutely devoted to this business

As you can see for yourself, there are quite a few things that can take into account when it comes to vacation rentals pricing optimization. Failing to do so means that you are just acting out randomly and you wouldn’t be able to make a serious profit out of your rentals – this is something you can be sure of.

We’ve covered some of the most important and commonly used strategies, now let’s move on to the ways to manage vacation rental pricing.

Airbnb Pricing Management – What are your options?

There are a few different approaches that you can undertake, so let’s have a look.

  1. Manual Pricing

This entails that the host is changing the prices based on his own gut feeling and on his expertise. There are certain advantages here, especially if you are an experienced host.

On the one hand, it is guaranteeing that you stay in control, but on the other, it is less accurate, there is a risk of making mistakes and it is time-consuming. This is something that you need to take into serious consideration.

  1. Airbnb Smart Pricing

This is a feature offered by the Airbnb and it allows hosts to set up min & max pricing. The platform combines these and uses the information of the supply and demand and is going to come up with a recommended price which is actually tailored to your property.

Now, according to Airbnb, this system takes into account a range of different factors, including but not limited to special events, seasonality, hotel prices, and the prices of the competitors, the local occupancy rates and others of the kind.

However, a lot of Airbnb hosts are not satisfied as the range for mistakes by the system is rather large and it lacks the necessary accuracy.

  1. Using Automation Software

There are specialized software products which are used to control the prices of your listings. There are quite a few benefits. The process is entirely automated and it is incredibly accurate. It is also comprehensive than the majority of the pricing algorithms.

The only drawback here is that this is a paid tool.

As you can see, Airbnb price management also requires you to consider all the factors and make a choice to guarantee the proper vacation rental property price optimization.

Interview with Guest Speaker Ian McHenry

As mentioned at the beginning of this article we have invited a guest speaker to our webinar – Ian McHenry CEO of Beyond Pricing. He shared some of his expertise and recommendations on Beyond Pricing. So, here is the actual interview, let’s give it a go.

What changes should we expect in the short-term rental sector?

People are about to become a lot more sophisticated when it comes to their pricing. Tools such as Airbnb pricing are actually depressing the prices and when this is combined with the enhanced supply we are able to see a certain dive in the prices. This is about to change as people will start using more comprehensive technology to formulate their prices.

Are a lot of people using automated tools or are they sticking with Airbnb smart pricing?

The tendency is that people are starting to skew away from Airbnb smart pricing. This is due to the fact that it fails to provide the necessary level of customization capabilities. At the same time, it is not nearly as accurate as other automation tools which are third-party and independent. While it’s true that more of the hosts have yet to make the transition, we can clearly see that the majority are moving towards automated Airbnb price tools.

How does Beyond Pricing help?

This is a tool which is a third-party price management software. You have to link your Airbnb or HomeAway account and the tool is going to get millions of rows of data convenient analyzed in order to calculate the most effective prices you can take advantage of.

The product is looking to take advantage of seasonality, holidays, and trends in the market including increasing and decreasing trends and everything which has even the slightest impact on price formation. The tool then proceeds to provide you with the average price you can take advantage of and then it is also going to provide you with the maximum price that you can squeeze.

What kind of technology is used to get the pricing recommendations?

A lot of it is machine learning. At a higher level the tool measures the demand in order to understand how much is your property wanted. And, the second thing is to take this demand into account when you are understanding how much to increase or, accordingly, decrease your prices.

Do you take different pricing strategies into account?

The tool adapts to different pricing strategies in order to maximize the rates that you are getting per night. This is achieved through enabling the client to set comprehensive and enhanced minimums and maximums based on the analysis carried out by the software.

What is your top advice when it comes to Airbnb pricing strategies?

In general, you need to leverage a tool in order to at least understand your market. Using tools such as Beyond Pricing is going to enable you to take a look at the market is. You will know which the major events are, the high seasons and the low seasons. Make sure that you are making informed decisions. There are counter-intuitive events which you need to take into account.

These were some of the answers provided by experienced market analyst and long-term Airbnb host Mr. Ian McHenry, CEO of Beyond Pricing – one of the most comprehensive third party software out on the market.

It’s quite obvious that professional Airbnb management will require constant monitoring of the movement of the market. What is more, professional tools are also needed to assist you and help you be successful in the vacation rental business.

Automation tools for your Airbnb business

Apart from Airbnb pricing optimization tools, there is also vacation rental software you might want to look at in case you are a professional host or a vacation rental manager. One of them is iGMS – a comprehensive Airbnb management tool which is designed to help you with day-to-day tasks and enhance your short-term rental income. It offers native and 2-way integration to the platform and provides a range of different benefits, including:

  • A single inbox for your messaging
  • Direct guest communications
  • Ability to manage all of your bookings
  • Automating your overall day-to-day Airbnb operations
Airbnb pricing optimization tools

This solution will enhance your short-term rental business by preventing you from making involuntary human mistakes. It will provide you with a chance to focus on growing your business instead of having to handle some routine and rather unnecessary matters. The tool saves a tremendous amount of time which is definitely something to consider.

Some of the main features of the iGMS include:

  • Synchronizing different platforms
  • Managing multiple accounts
  • Multi-calendar available to manage all of your reservations
  • Automatic messaging
  • Convenient price updates
  • Work orders and operational tasks
  • Airbnb management
Airbnb pricing optimization

You are always welcome to give it a try with a 14-days trial to see for itself how it works. And if you have one property to manage, go ahead and start using our vacation rental software free!

We truly hope that the information we shared is valuable to you and will help you increase your efficiency while managing Airbnb and deciding on your Airbnb Pricing Strategy. Regardless of whether you are the sole owner of a listing or you are managing several properties as a business, all of the above represents powerful data that you can take advantage of to increase your profit and grow your business. You are welcome to share this with your friends and colleagues that might have an interest in the topic.

Wish you all profitable hosting!

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