Airbnb Pricing: Getting it Right


Airbnb Pricing: Getting it Right

Knowing just how much to charge for your place on Airbnb has been a significant challenge for many Airbnb hosts. When it comes to pricing, your one and only goal is to find the ‘sweet spot’ – the price you charge that maximizes your occupancy rate as well as cost per night.

Over-quoting or under-charging will both result in missed booking opportunities. To overcome this challenge, Airbnb has introduced pricing tools to assist hosts in circumventing their pricing blind spots.

Airbnb uses a trove of host and guest data such as travel trends, your listing’s amenities & features and how much guests have paid for similar listings, to recommend optimal nightly prices to hosts.

The components of Airbnb pricing include the following:

Basic price (per night) – defined by the host.

Cleaning fees (optional) – defined by the host.

Host service fees, charged by Airbnb to the host – 3% of every reservation.

Guest service fees, charged by Airbnb to the guests – 6 to 12% of the total price per night (basic price + cleaning fees)

Taxes (depending on the country of residence of the guest) is added by Airbnb as a % of the guest service fee

Conversion fees, charged by Airbnb if the guest pays in a different currency from that of the host – 3% of the total price charged.

Airbnb’s goal is to transform what is otherwise a guessing game into a data-driven, evidence-based calculation of nightly prices that maximize a hosts’ earning potential.


The easiest way to understand how the Airbnb Pricing Tip tool works is to think about how hotels charge different prices for different nights. A hotel in the KLCC vicinity knows it can charge a lot more for a room during the F1 Season as compared to a regular season; a hotel has a longer time frame to gradually reduce the price of unbooked nights six months out from today’s date than it does one week from today; and a hotel is aware of the alternative accommodation options that exist in the area.

Using its very own algorithm, the Airbnb Pricing Tool works in the same way. Airbnb has far greater visibility than individual hosts do over all the factors that indicate current levels of supply and demand, as well as the relationship of these variables to listings such as yours.

All these factors are taken into consideration to recommend a price tip that aims to strike the optimal balance between maximizing bookings with charging the maximum possible amount per night for each of those bookings. In some instances, the tool may recommend charging less than what you think you are otherwise able to get, based on the assumption that a slightly lower cost-per-night is still a better outcome than having your place remain vacant for an entire week. A guaranteed 90% profit is definitely preferable to a 100%, albeit PROBABLE booking.


The term ‘Orphan Nights’ refers to a vacant night between two bookings. It is usually very difficult to obtain tenants for these ‘in-between’ days. The goal is to increase the likelihood that the subset travelers who are in the market for a one-night stay will choose your listing.


I recommend fixing a lower price compared to other listings similar to yours in terms of location, size, amenities, etc – at least until you obtain 2 or 3 great reviews. Once your listing’s popularity starts rising in ranks, then you can increase the price until you find your sweet spot. You will need those first few reviews to for your listing to appear first during searches. Another time to modify your pricing is by checking when your peak season is, as the demand for staying at that time is higher.

Is there a conference nearby that weekend or is it the school holidays? Capitalize on these and try to optimize your pricing for those days when there’s a peak and lower it when you enter the low season. Airbnb now offers a price suggestion tool that can help you find the best price at any point of time but I would suggest trying it manually first and using this tool and by comparing to others as the best way to start.

Try playing with pricing for some time until you figure it out; it really works well for those looking for long term rentals. Do the same with the weekends. Maybe you can charge a bit more during weekends and less during weekdays.

Use the calendar to set those prices in advance to avoid surprises. It really comes down to knowing your market. What is the vacancy rate like at various times of the year? What are the prices set by similar listings in your area?

If they are dropping their prices aggressively, they will make you look expensive and it will be difficult for you to ensure a high occupancy rate.

Connect with Andrew at &

Sign up and stay updated
Get the latest property news, home solution tips, interior design ideas and property guides.
By subscribing, you consent to receive direct marketing from Malaysia Sdn Bhd (iProperty), its group of companies and partners. You also accept iProperty’s Terms of Use and Privacy Policy including its collection, use, disclosure, processing, storage and handling of your personal information.