Since Airbnb is a seasonal business, you must be flexible with your rates. To maximize your short term rental income, use dynamic pricing Airbnb.
Table of Contents
- What Is Dynamic Pricing?
- Why Do Airbnb Rental Investors Need a Dynamic Pricing Tool?
- What Is the Best Airbnb Dynamic Pricing Tool?
- Use Mashvisor’s Dynamic Pricing to Improve Airbnb Income
Owning a short term rental is one of the most lucrative forms of real estate investment. Short term rentals continue to increase in popularity, following the emergence of home-sharing platforms more than a decade ago. Being more affordable than hotel accommodations, many travelers prefer to book an Airbnb property than stay at hotels.
Short term rentals are a hospitality business; the market demand fluctuates based on the season. Although seasonality is one of the risks of Airbnb investing, it’s possible to get bookings all year round if you invest in the best short term rental markets. Also, as an Airbnb owner, you must be flexible when it comes to pricing your property.
However, new investors find it quite challenging to determine the best rates for an Airbnb rental property. You must conduct thorough research and analysis regularly to stay updated. Moreover, you also need to study the market and understand your competition.
The good news is that there are dynamic pricing tools available online today that can help Airbnb owners optimize their short term rentals. With the tool, it would be easy for you to set the best short term rental rates based on market demand and seasonality. In this article, we will learn more about Mashvisor’s Dynamic Pricing feature, as well as Airbnb’s version of the tool, and find the best one to use for your Airbnb business.
What Is Dynamic Pricing?
In business, dynamic pricing is the practice of altering the price of a service or product based on current market conditions. Since market demands typically change, charging differently based on the demand can help owners improve their profitability. The concept of dynamic pricing is to charge based on the current demand from buyers and customers.
For example, if there is a greater demand for a particular service or product, owners typically charge a higher price to take advantage of the market demand. In contrast, if the demand is low, the price is also low. It is the basic principle of supply and demand in economics—and the same concept applies as well to real estate, specifically in rental properties.
In real estate, dynamic pricing is a term used to refer to a smart pricing technology that helps property owners automate their rental rates based on different factors. In most cases, dynamic pricing is practiced among short term rental property owners since the short term rental market is seasonal. With dynamic pricing, rates change depending on the season.
The changes in rental rates are determined based on market demand, seasonality, holidays, and historical data. Typically, rental rates during peak seasons are much higher compared to the rates during the low seasons. The goal of Airbnb dynamic pricing is to ensure that the rates for vacation rentals are optimized based on the demand from the short term rental market.
Why Do Airbnb Rental Investors Need a Dynamic Pricing Tool?
An Airbnb dynamic pricing tool is essential for short term rental investors because it can greatly help them maximize their profitability and minimize their vacancies. With a dynamic pricing tool, it would be easier to automate your vacation rental pricing based on several factors, such as Airbnb demand and market conditions.
Here are a few reasons why Airbnb rental owners should use a dynamic pricing tool:
1. To Optimize Your Rates Based on Seasonality
As mentioned, Airbnb is a seasonal business. It means that the demand for vacation rentals fluctuates from time to time, depending on where your vacation rental is located. For example, if you own a property near a beach, you will most likely get a high occupancy rate during warm seasons. However, the market demand will be scarce during cold seasons.
Because of the fluctuating market conditions and demand from renters, you need to optimize your pricing system to ensure that you can keep up with the trends. Failing to set the right rental price for your Airbnb property can lead to missed opportunities and long vacancies. To get the maximum benefits of owning an Airbnb, you should set your price rightly.
Related: Airbnb Short Term Rentals vs Monthly Rentals: What Real Estate Investors Need to Know
2. To Maximize Income and Minimize Vacancies
If you charge your rental rate too low during peak seasons, you will miss out on opportunities of being able to take advantage of the high demand. Plus, you won’t be able to maximize your profits. On the other hand, if you charge your rate too high during lean seasons, no one might be interested in booking your property. It will result in lengthy vacancies.
Also, if you price your rental unit too high compared to the fair market value, even during peak seasons, you might still end up not getting any bookings. That’s why it’s important to get updated with the current market trends so you will know how to price your vacation rental correctly. With a dynamic pricing tool, it can be done easily.
3. To Assess Market Conditions and the Competition
It’s crucial to get access to up-to-date market insights and learn how other similar properties in your area are performing. This way, you will understand the competition better, helping you to strategize carefully and plan how to position property to improve your earning potential. The use of dynamic pricing tools for Airbnb can help you stay ahead of the competition.
The best dynamic pricing tools for Airbnb should be able to provide you with market insights and comprehensive short term rental analytics. Through this data, you will learn how much similar properties in your area are charging during a certain period. It will give you an idea of what are the best rates to charge for your Airbnb property too.
What Is the Best Airbnb Dynamic Pricing Tool?
There are different kinds of Airbnb dynamic pricing software available in the market today, and each tool provides varied features and benefits. Before we decide what software provides the best Airbnb dynamic pricing, let’s first discuss the features and functionalities that you should look for. Doing so is a must when choosing a dynamic pricing Airbnb tool.
Important Features of a Dynamic Pricing Airbnb Software
The goal of Airbnb dynamic pricing is to help short term rental owners set the correct nightly rates for their vacation rentals. Using comprehensive Airbnb data analysis, dynamic pricing takes into account various factors that can affect the rates of Airbnb rentals. The more factors it takes into consideration, the more accurate the recommended pricing will be.
While there are several dynamic pricing tools available, not all of them work the same. To find the best dynamic pricing for Airbnb, you need to ensure that it comes with the following important features:
1. Real-Time Price Recommendation
An important feature that you should look for is the tool’s ability to provide real-time pricing recommendations based on current market conditions and other data points. Since the short term rental industry fluctuates constantly, making sure that you are able to keep up with the changes in trends is crucial to stay profitable.
Some dynamic pricing tools are late in making predictions because their system does not pull out real-time short term rental data. If the data is not updated in real time, it could affect the quality of the pricing recommendations the tool provides. There’s a high risk of error if prices are not optimized based on real-time real estate trends, and it could affect your business adversely.
2. High-Quality Sources for Data and Analysis
Another feature that you should look for when finding the best dynamic pricing Airbnb software is the quality of the data sources. Where does the platform get its Airbnb data analytics? Most dynamic pricing tools for Airbnb get their data from the Airbnb platform itself. They use the trends based on booking history and prices set by most Airbnb units to determine the best rates.
While they can be useful, there are times when data from Airbnb alone may not be sufficient. The best dynamic pricing software gets its data from various high-quality sources. The sources include the current trends from Airbnb and other home-sharing platforms. It should also use AI-powered data sources and the area’s reliable data systems to account for seasonality and local events.
3. Owner’s Ability to Control Prices
While dynamic pricing systems make the process of setting Airbnb nightly rates so much easier, the best ones are those that provide Airbnb owners with full control over their business. The dynamic pricing tool should not control the rental rates without the owner’s consent. That being said, owners should be able to set their preferred parameters that the system must account for.
For instance, vacation rental owners must be able to set the base price, which is their preferred starting price for the short term rental. Also, they must be able to determine their preferred minimum price, which is the minimum amount they are willing to rent the property for. Moreover, owners should also be able to set other parameters like maximum price and booking settings.
4. Access to Market Insights and Rental Comps
The best dynamic pricing tool for Airbnb should not only provide nightly rate recommendations based on the current rental demand and seasonality trends. It should also be able to provide access to such trends and insights so that owners can analyze the trends themselves. It will help them fully understand the ins and outs of the vacation rental market.
By being able to access market insights, vacation rental owners can also assess their competition. Through the rental comps data that often comes with market insights, it would be easier for Airbnb hosts to perform a thorough rental analysis. It will help them position their property properly so it can attract more guests and stand out among the competition.
Related: Rental Comps: What Are They and Where Can I Find Them?
5. Ability to Connect Multiple Accounts
Some Airbnb dynamic pricing software only allows users to connect one Airbnb account at a time. It is acceptable for Airbnb owners who only manage their own short term rental listings. However, for property managers who manage several listings from different hosts at once, logging in and out of the system can be a waste of time.
When choosing the right tool that provides dynamic pricing for Airbnb, make sure that the tool allows you to connect several accounts simultaneously. Moreover, it should let you sync your rates directly to the Airbnb platform without manually inputting the recommended nightly rates to Airbnb.
Mashvisor’s Dynamic Pricing Tool: The Best in the Market
Based on the important features of a dynamic pricing tool that we mentioned above, it is safe to say that the best dynamic pricing software for Airbnb is Mashvisor’s Dynamic Pricing tool. The tool is designed to help Airbnb investors set accurate nightly rates for their vacation rentals based on several considerations.
Here are the reasons why Mashvisor’s Airbnb dynamic pricing model is the best:
1. It Considers Several Factors in Determining the Best Rates
Mashvsior does not only rely on the current Airbnb rates and bookings to determine the best price for your vacation rentals. To get the best out of your investment property, you must ensure that the pricing recommendations that you follow are based on several factors so that they are realistic and accurate.
Mashvisor takes into account the following factors when making an Airbnb price suggestion:
- Short rental market trends
- Airbnb market demand
- Local events and holidays
- Overall seasonality of the location
- Booking history
With the above considerations, you can trust that the rental estimate Mashvisor suggests is based on carefully researched data and analytics.
2. It Gets Its Data From Various Reliable Sources
Another reason why Mashvisor’s Airbnb dynamic pricing tool is considered the best in the market is its highly reliable data sources. Mashvisor gathers data and market information from several resources, including active Airbnb listings and data from other platforms as well. It also regularly updates its database, making sure that the data stays fresh and accurate.
Mashvisor’s high-quality data, combined with its AI-powered technology, ensure that users will get trustworthy Airbnb pricing solutions that are accurate, realistic, and always up-to-date. Not only that, but you can also trust that all recommendations are provided with the goal to maximize not only your booking rate but also your profits.
3. It Allows You to Assess Your Competition With Up-to-Date Market Insights
Mashvisor’s Dynamic Pricing tool does not only set prices for your short term rental listings, but it also provides you with a more in-depth understanding of the market’s performance. The Market Insights feature is a key aspect of Mashvisor’s Dynamic Pricing tool—it allows you to see how similar properties in your area are performing.
With Market Insights, you will access reliable market data that can help you strategize your investment plans carefully. You will obtain access to the current occupancy rate in your area, as well as the number of active listings, the current average daily rate, average monthly revenue, and any information about new listings.
You can filter your search by setting the property type and the number of bedrooms so you can generate data results that are close to your own property. By customizing your search, you’ll be able to access the right information and insights that are applicable to the vacation rental property that you own.
The said information can help you determine how the short term rental properties are doing in your area. What’s more, you will also see the historical data for the market occupancy rate, market revenue estimate, and market average daily rate for the past 12 months. It gives you a better outlook on the vacation rental market or neighborhood and its income-earning potential.
4. It Offers Access to Smart Calendar Feature
Another thing that makes Mashvisor’s Dynamic Pricing stand out from the rest is its smart calendar function. The calendar feature allows you to manage and synchronize the nightly rates for all of your Airbnb accounts under one platform. It allows you to make adjustments on certain dates, overriding both Mashvisor’s and Airbnb’s settings.
If you automate the rates for a particular property and you want to override the dynamic pricing settings for a certain period, the calendar allows you to do so. For example, if you want to set different rates for the first week of December, just click on the date, set a duration, and change the rates for the period selected.
You can also set the minimum required number of days a guest can stay at the property. You can block off certain dates on your calendar if you plan to make the property unavailable for booking during a particular period.
5. It Gives You Full Control
With Mashvisor’s Dynamic Pricing, you’ll have full control of your real estate investment because you have the option to either set your rates manually or automate your pricing strategy. If you choose to automate your short term rental rates, you still have further control by setting the base price, minimum and maximum prices, and your booking and availability settings.
6. It Gives You an Overview of How Your Property Performs
With Mashvisor’s Dynamic Pricing, you can easily keep track of your Airbnb property’s performance and understand how it fares against the competition. With access to actual market data, as well as your competitors’ performance, you can make informed business decisions and maximize your income potential.
Mashvisor’s Dynamic Pricing vs. Airbnb’s Smart Pricing: What’s the Difference?
If you already own an Airbnb property, you might already be familiar with Airbnb’s Smart Pricing feature. You might be wondering how Mashvisor’s Dynamic Pricing differs from that of Airbnb—and what makes Mashvisor’s dynamic pricing tool better.
In general, both tools offer automated pricing functionality for your Airbnb investment property. However, there are several things that make Mashvisor’s Dynamic Pricing the better option compared to Airbnb’s Smart Pricing.
As discussed above, Mashvisor’s Dynamic Pricing tool comes with a lot of features and functionalities that are useful to Airbnb owners. In addition, the platform’s short term rental pricing tool allows you to optimize both your occupancy rate and income potential.
Keep in mind that as a short term rental owner, you need to maximize your income potential during peak seasons because the demand for Airbnb rentals is high during such times. Most travelers would be more than willing to pay a little extra to book a stay.
Similarly, you also need to ensure that your property gets the highest possible occupancy rate, especially during off-peak seasons when demand for vacation rentals is scarce. To do it, you should adjust your pricing a little lower than usual to encourage those few guests to book your property instead of booking other properties in the same area.
That being said, let’s now take a look at the features offered by Airbnb Smart Pricing.
Airbnb Smart Pricing Features
Airbnb hosts can turn on the Smart Pricing feature in their accounts so that the nightly rates of their listings will automatically change based on the market demand. The tool aims to optimize the pricing strategy of Airbnb owners without the need to constantly monitor the market.
Here are some features of the Airbnb Smart Pricing tool:
- It allows you to set fluctuation limits: Similar to Mashvisor’s Dynamic Pricing, Airbnb allows hosts to set their own fluctuation limits and manually customize prices on specific dates in the calendar.
- It is determined based on several factors: According to Airbnb, the nightly rental price that the system sets is based on the location of the listing, Airbnb demand, and seasonality.
It’s important to note, however, that Airbnb’s Smart Pricing tool does not provide access to current market trends and insights. Users will not be able to see how their competitors are doing. Thus, it doesn’t help them strategize their investments to stay ahead of the competition.
In addition, Airbnb’s price recommendations are more on optimizing occupancy instead of revenue. Although occupancy rates can significantly affect your profitability, setting nightly rates that are not optimized toward improving revenue may not maximize your income potential.
Related: Airbnb Market 2023 Trends, Data, and Analysis
What Makes Mashvisor’s Dynamic Pricing Airbnb Tool Better?
Generally speaking, the features and functionalities offered by Mashvisor’s Dynamic Pricing are more helpful when it comes to maximizing both your earnings and occupancy.
Because you’ll get access to comprehensive short term rental analysis, it will be easier for you to understand how the market performs at a given time. It allows you to know whether or not there are sufficient demand from the market.
As a real estate investor, it’s essential to understand the factors that affect your pricing—and your investment. It is a better strategy than just accepting the recommended prices without understanding the reason behind them.
In addition, access to market insights will make you comprehend how your property performs against the competition. It is important information if you want to stand out among the rest. With this, you’ll be able to make necessary business decisions that can help you grow your investment and improve your revenues.
And finally, with Mashvisor’s Dynamic Pricing, you can synchronize the prices of all your listings under different Airbnb accounts using one platform only. If you own or manage more than one Airbnb account, using Mashvisor’s dynamic Airbnb pricing software is your best option.
Are you ready to maximize your Airbnb earnings? Use Mashvisor’s dynamic pricing Airbnb tool. Start your 7-day free trial now.
Use Mashvisor’s Dynamic Pricing to Improve Airbnb Income
Owning a short term rental business is one of the best ways to become profitable in real estate. While vacation rentals are seasonal, and your revenues will typically fluctuate depending on the season, most Airbnb owners still manage to earn more than long term rental owners do. To maximize your Airbnb earnings, it’s crucial to adopt a dynamic pricing strategy in your business.
However, charging your listings’ rental rates every now and then can be time-consuming. You need to do your research and learn the current trends in the market to ensure that you’re charging the correct Airbnb prices. As a real estate investor, you may not have sufficient time to do all of them manually.
That’s when dynamic pricing Airbnb tools come in handy. With such tools, it would be easier for you to determine the best rental rates for your short term rental listings. Most Airbnb dynamic pricing tools available today automate the pricing strategy. Owners will no longer need to gather data on their own to decide how much to charge per night for their rentals.
However, while most other dynamic pricing tools for Airbnb offer an automated pricing feature, only Mashvisor’s Dynamic Pricing software provides several more. With Mashvisor’s tool, users will achieve a deeper understanding of the market conditions and their competitors’ performances. It will allow you to position your property strategically to gain more traction.
What makes Mashvisor’s Dynamic Pricing tool different from other similar tools is its reliable data sources and other useful features that may not be present in other platforms. Mashvisor is known for its AI-powered technology and machine-learning algorithms. They are not only trustworthy but are also designed to ensure maximum profitability.
Schedule a demo today to see how Mashvisor’s Dynamic Pricing tool works.