Using an automated pricing tool has become a must when running an Airbnb business in order to maximize rental income and return on investment.
After the boom of the Airbnb platform, short term rentals turned into the most profitable real estate investing strategy. However, simply buying a rental property and listing it on Airbnb or Vrbo does not guarantee positive results. Airbnb hosts need to apply dynamic pricing to attract bookings and generate good ROI.
Table of Contents
- What Is a Pricing Tool?
- Why Should Airbnb Hosts Use a Pricing Tool?
- Where to Find the Best Airbnb Pricing Tool
- Accessing the Best Pricing Tool for Airbnb Listings
Applying dynamic nightly pricing on your vacation rental might sound easier than it is. In reality, it requires ongoing research of the local market and your competitors and keeping track of tourism trends. You need to collect a ton of data to decide on the most appropriate nightly rate that will strike the right balance between occupancy and revenue.
To avoid all the active work and turn your Airbnb property into a passive investment, you need the help of an online pricing tool that automates the dynamic pricing process.
In this article, we will look at what the tool is and what it does for hosts. Find out why it is a must for forward-looking investors. We’ll also show you why the Mashvisor Dynamic Pricing tool is the best one on the market.
Let’s get started so that you can get on track to optimizing the performance of your short term rental property.
What Is a Pricing Tool?
An Airbnb pricing tool is an online real estate investment tool that allows hosts to automate dynamic pricing on the property listing platform. The tool relies on artificial intelligence (AI), big data, and machine learning to find the most appropriate nightly rate.
It takes into account supply and demand trends in the local short term rental market. The trends includes seasonal changes in leisure and business travel. The tool also looks at the daily rates charged by other hosts in the area. It gathers and analyzes all the data collected during the Airbnb market research to evaluate what nighty pricing makes the most sense for a particular property.
Importantly, the suggested nightly rate is tailored to the specific characteristics of your property, including type, size, amenities, and everything else. The daily rates proposed by the best pricing tool are guaranteed to maximize occupancy and monthly rental income. Moreover, return on investment will also be optimized, whether you look at Airbnb cap rate or cash on cash return.
All in all, a dynamic pricing automation tool helps hosts ensure that their vacation rental performs up to its potential and that no money is left on the table. That’s why such a tool is frequently referred to as a smart pricing tool.
Related: 9 Factors That Affect Rental Rate Calculation
Why Should Airbnb Hosts Use a Pricing Tool?
Airbnb hosts should use a smart online pricing tool because it offers many benefits. Most importantly, it automates dynamic pricing for short term rental properties.
Why Is Dynamic Pricing Important for Airbnb Rentals?
Doing well on the Airbnb platform (as well as other vacation rental listing platforms) is all about outperforming the competition. Chances are that there are dozens or maybe even hundreds of other Airbnb rentals available in your local market, and probably many of them offer the same space and amenities. They are known as Airbnb rental comps.
It means that you are competing against all the said comparable properties, and in order to win, you must price your rental better than they do. First of all, the Airbnb ranking algorithm gives preference to properties that are competitively priced. So, if you offer the top daily rate in your area, your listing will show higher in search results for guests.
Second, Airbnb guests are likely to choose a rental that charges less than other similar rentals in the market. After all, many travelers select short term rentals over hotels because of the more affordable pricing.
All the above means that you must constantly work on and adjust your nightly rate in order to generate bookings and boost your Airbnb occupancy rate. Unless you can access up-to-date, reliable short term rental data, finding out what your competitors charge and how much you should will take all your time.
This is where the Airbnb pricing tool comes into play.
What Are the Benefits of a Dynamic Pricing Tool?
Using a pricing tool brings the following advantages to Airbnb hosts:
- More bookings: When the pricing tool prices your Airbnb listing dynamically, it shows more frequently in guest searches, leading to more reservations and a higher occupancy rate. And getting your rental occupied is the way to make money in vacation rental investing.
- Better rental income: More bookings automatically leads to more revenue as it minimizes vacancy. The best Airbnb pricing tools make sure not to underprice a rental for the sole purpose of getting it rented out. That’s why they ensure the best possible Airbnb income for hosts.
- Enhanced return on investment: Higher short term rental income leads to a better cash flow and a better ROI. Boosting profitability is the ultimate goal of any real estate investor.
- Passive investment: While the performance of your vacation rental is optimized, it happens without your constant intervention. Thus, a pricing tool leads to passive Airbnb investments. Making passive real estate income is like a dream come true for investors.
All the above benefits make using an Airbnb pricing tool a must in 2023.
Related: What Kind of Airbnb Return on Investment Can You Expect in 2023?
Why Should Hosts Not Use the Airbnb Smart Pricing?
To help hosts automate dynamic pricing in a passive manner, the Airbnb platform introduced the Smart Pricing feature. It is an in-built tool that hosts can choose to switch on or off for each of their listings.
The Airbnb Smart Pricing is based on the type of listing, its location, the season, demand, and other factors. If you enable the option, Airbnb will adjust your nightly rates to maximize bookings within the range of your selected minimum and maximum nightly prices.
The problem is that Airbnb Smart Pricing works in a way that aims to optimize reservations and occupancy rates. It means that the tool might frequently underprice your property for the sole purpose of getting it booked. It does not always consider whether it leads to the best possible revenue.
That’s why the Airbnb feature is suboptimal compared to other pricing tools on the market that work to maximize income, not bookings. After all, as an Airbnb host, you want your property to make as much money as possible, not to be rented out as much as possible.
So, savvy investors need to look for the best Airbnb dynamic pricing tool elsewhere.
Where to Find the Best Airbnb Pricing Tool
Now that you know why you need a pricing tool to enhance the performance of your vacation rental and why you should not rely on the Airbnb Smart Pricing feature, the question becomes:
What is the top dynamic pricing tool on the market?
Before we’re able to provide an answer, let’s take a look at the most important characteristics of the best tool for an Airbnb business.
What Are the Must-Have Features of the Best Pricing Tool for Airbnb Properties?
The top app for the nightly pricing of short term rentals must include the following features:
- Gather reliable data: A pricing tool is only as good as the Airbnb rental data that it collects and uses in its analysis. For optimal results, the data should come from the Airbnb platform itself and account for active listings.
- Use the power of AI: In the current market driven by artificial intelligence and machine learning, the best pricing tool needs to integrate them into its functions. The tool should be able to analyze all collected data and draw the right conclusions about the most appropriate daily rate on its own.
- Adapt to each market and property: Investing in vacation rentals is highly localized, which means that what works in one market might not work in another. The same holds true for different property types. To provide the best results, a dynamic pricing tool should customize daily rates for both the specific market and the property.
- Maximize income: Unlike Airbnb Smart Pricing, a good tool should aim to boost revenue, not bookings. As an Airbnb host, you want to make money from your vacation rental, and getting it occupied at any price doesn’t necessarily mean you will. A tool should be able to balance between nightly rates and occupancy for maximum income.
- Integrate with other tools: Last but not least, the best Airbnb pricing tool should not work in a vacuum but integrate seamlessly with other apps that hosts use. It includes both their listing on the Airbnb website and analytical tools like an Airbnb profit calculator.
Now that we know what functionalities to look for, identifying the best pricing tool for Airbnb properties is now more feasible.
Why Is Mashvisor Dynamic Pricing the Best Airbnb Tool?
The top Airbnb pricing tool available in the market right now is the Mashvisor Dynamic Pricing feature, as it includes all the must-have characteristics listed above, as well as more.
In brief, the Dynamic Pricing tool available on the Mashvisor real estate analysis platform allows investors to implement smart pricing strategies that guarantee maximizing Airbnb income. Meanwhile, the tool lets hosts to be as involved or not involved in the process as they want.
In other words, an investor can set up complete dynamic pricing automation by allowing the tool to override daily rates based on its analysis. It is ideal for Airbnb hosts with little experience in the short term rental industry. Those looking for passive real estate income will also benefit from such a feature.
Alternatively, hosts can also review the suggestions of the Mashvisor pricing tool and decide whether to approve them or not. It is the better option for hosts with years of experience in vacation rental market analysis and individuals who’d like to participate actively in the management of their investment.
Regardless of what a host opts for, the proposed daily rates are guaranteed to maximize Airbnb revenue by balancing between the nightly price and the occupancy rate. The Mashvisor dynamic pricing tool uses AI and machine learning to mash and analyze data from the Airbnb platform.
Other Helpful Mashvisor Real Estate Investment Tools
In addition, Dynamic Pricing is part of the comprehensive package of real estate investment tools that Mashvisor provides. It includes:
Related: How Is Mashvisor’s Property Finder Helping Real Estate Investors?
How to Get Started With the Mashvisor Dynamic Pricing Tool
Getting started with the Mashvisor Airbnb dynamic pricing tool requires a few steps:
- Linking your Airbnb account to Mashvisor Dynamic Pricing: The Mashvisor pricing tool allows you to link your Airbnb account(s) directly so that you use a single platform for managing pricing. You can find out how to do it here.
- Importing your Airbnb listings: Second, you need to import your Airbnb listings into the Mashvisor tool. You can import as many properties as you manage on the Airbnb platform.
- Analyzing the local Airbnb market and comps: You can use the Market Insights to see how short term rentals in your location perform. It gives you access to the average daily rate, occupancy rate, monthly revenue, active listings, and new listings. In this way, you can get a better understanding of what to expect from your vacation rental.
- Setting up base, minimum, and maximum nightly rates: Next, you need to choose a base price for your property (based on local market trends), as well as the minimum and maximum that you allow the tool to set. It ensures that you feel comfortable with whatever nightly price the Mashvisor Dynamic Pricing toolsets.
- Automating Airbnb pricing: Finally, you can choose whether to allow Mashvisor to take over the dynamic pricing of your Airbnb property for complete automation. If you prefer, you can remain in control and approve daily rates based on the tool recommendations.
Sign up for a 7-day free trial of Mashvisor to see how we can automate the dynamic pricing of your Airbnb property for optimal results.
Accessing the Best Pricing Tool for Airbnb Listings
A pricing tool is now a must-have in the arsenal of tools for savvy Airbnb hosts. A good one helps investors automate the process of dynamic nightly pricing. It does so by maximizing rental income as the product of daily rate and occupancy rate. It is achieved with the use of AI and machine learning analysis of the performance of comps in the local market.
If you’re wondering where to find the best dynamic pricing tool for Airbnb rentals, you’ve come to the right place. The Mashvisor Dynamic Pricing feature combines all the required qualities of the tool. It helps ensure optimized performance with zero intervention by the host. You can earn not only maximum revenue but also passive income.
Schedule a free demo of the Mashvisor Dynamic Pricing tool to see how we can optimize the pricing of your short term rentals.