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439. The #1 Metric to Master Your Airbnb Pricing Strategy

Introduction and Welcome

Sarah Karakaian: [00:00:00] [00:00:30] Hello. Welcome back to another great [00:01:00] episode. My name is Sarah Karakaian.

Annette Grant: I’m Annette Grant. And together we are. Thanks for visiting.

Sarah Karakaian: Let’s kick off this episode like we do each and every week.

Listener Spotlight: The Round Top Estate

Sarah Karakaian: And it’s sharing one of you, our listeners, who’s going over to strshare.com entering in all the information about your short term rental. So we can feature you here on the podcast, on our Instagram account on Sundays. Annette, who are you sharing this week?

Annette Grant: This week we are sharing @theRoundTopEstate. Again, @theRoundTopEstate.

Sarah Karakaian: [00:01:30] And it’s epic.

Annette Grant: Is it an estate? It is a castle like mansion. With an insane view, indoor pool, sauna, hot tub, cold plunge. I mean, it does not disappoint. I’ve been going through the feed. Everyone, please check it out. Two things I want you to see that I think they do a great job of. Their link in bio, you can go and book direct. Or they have a YouTube tour of the property.

Sarah Karakaian: Oh, I like the YouTube tour.

Annette Grant: I think that’s so great. Especially, I mean, and this is for any, any [00:02:00] host. One bedroom all the way to this estate. They have knocked it out of the park. And this place is special. Um, it’s, it is. It’s on the top of this, um, mountain. You can kind of see it from everywhere. It used to be called the Mystery Mansion because the person that owned it before them was very private.

Annette Grant: No one really knew how to get there. It’s like on 135 acres. Wow. We, it is special. It is in Wrightsville, Pennsylvania. So if you need to plan a retreat, a family reunion, wedding, I think they, I mean, it is like, Ooh, [00:02:30] I want to go stay there at least for a weekend, but check out, check out how they are promoting and marketing this place that sleeps 16, but has amenities for days and days and days.

Annette Grant: Well done Round top Estate.

Sarah Karakaian: Let’s get in to today’s episode and.

Understanding Revenue Management

Sarah Karakaian: Everyone, Annette and I are going to be putting more of an effort into content around pricing our properties. Cause we have, if we have learned [00:03:00] anything in the past, like a couple months of opening up the doors to our mastery and welcoming hosts, we can help them transform their business.

Sarah Karakaian: It is that pricing is stressing y’all out.

Annette Grant: Yes. And you’re under earning, you are underpricing your properties.

Sarah Karakaian: Revenue management is one of the biggest pain points for hosts. We hear it all the time. So today we’re going to give you one simple metric that will completely change how you price your property.

Sarah Karakaian: So what [00:03:30] is revenue management? Revenue management is about increasing and maximizing your revenue by understanding demand and then adjusting your availability and your pricing accordingly.

Annette Grant: And it is proactive, not reactive. You’re going to be making real time decisions based on market demand. data. And this isn’t about just tallying up your numbers, your reservations and your nightly rate.

Sarah Karakaian: You’re not alone. If you never really [00:04:00] understood what revenue management is, because Annette and I talked to a lot of you, a lot of hosts, and we actually found out it was, it happened way more than once, like a handful of times, where we asked a host what their revenue management strategy was, and they would talk about it and

Annette Grant: they say, Oh, yeah, I have a bookkeeper.

Sarah Karakaian: Yeah, we were like, Oh, no, no, no, no, no, no, because here’s the difference. So a bookkeeper or your bookkeeping numbers will tell you that you made. 5, 000 in the [00:04:30] month. Revenue management would ask, Interesting, could we have made 6, 500 in that month if we would have optimized our pricing? That’s the difference.

Annette Grant: Drumroll please.

The Importance of Booking Window

Annette Grant: This is the one metric you need to know and it is your booking window.

Sarah Karakaian: What is your booking window? I am so glad you asked. It is the average number of days between when the guest books and when they arrive.

Annette Grant: And this is [00:05:00] your compass. This booking window is the compass of knowing when to adjust your pricing, tweak your listings, or even run a promotion.

Sarah Karakaian: Okay, so how do you find your booking window? Well, if you’re using a third party, Dynamic pricing software like PriceLabs. Highly recommend. 10 out of 10. It’ll do it for you.

Sarah Karakaian: You can also go to your Airbnb Insights. If you’re only using Airbnb, that’s a good place to get it. And lastly, you could do it manually. You could track [00:05:30] when your guests are booking and when they’re checking in.

Annette Grant: But why? Host, you are so busy. Like, please, give yourself a break. Just use the technology. Ay-o!

Annette Grant: Here’s the thing.

Using Booking Window Data Effectively

Annette Grant: There is a huge difference between knowing what your booking window is versus using your booking window. Here’s the common host mindset that we find when we start talking to hosts about their pricing and we ask them, Do you know your booking window? Because it is so important. They kind of dismiss us and they’re like, Oh yeah, Price Labs tells me that it is, or Oh, I know how to [00:06:00] find it in Price Labs. Or I have a, I have a general idea. I looked it up once. That is all wrong

Sarah Karakaian: and not helpful.

Sarah Karakaian: So if you know your booking window, how many numbers of days is it between my guest books and they arrive? If you are outside of that window and demand is strong, right?

Sarah Karakaian: Your dynamic pricing software is telling you, demand is strong. That means people are willing to pay more to get their booking secured [00:06:30] and book early. So for example, I’m going to go into price labs right now, and I am looking that historically. Uh, February, which is the month we’re in right now, our booking window is, uh, nine days.

Sarah Karakaian: That’s what it was. That’s what it was in 2024. So I’m forecasting right now, right? I need to figure out what my pricing is going to be. Um, March, it was 11 days, April, it was 13 days, right? And so the dynamic pricing software will also tell us that the median [00:07:00] booking window is 14 days. So my booking window is a little tighter than what the median of the top 50th percentile of all short term rentals in our market, what their booking window is.

Sarah Karakaian: Just to give us a little understanding of the flexibility,

Annette Grant: but also just to. Lean in a little bit. This also can help you release the pressure and understand, okay, even if I’m not booked for a certain weekend and it’s three weeks out, that’s okay. You’re not having to stress about it. [00:07:30] That’s another reason just, um, understanding your booking window, it will bring peace when, you know, if you’re inside or outside of that booking window and understanding when you should anticipate a reservation,

Sarah Karakaian: but we’re not, this is not, and I am here for us having peace in our business, but

Sarah Karakaian: I also make sure that, you know, if you’re outside your booking window and you are not booked for that weekend, have peace, but also raise your rate because if demand is high, [00:08:00] because that means, okay, your property hasn’t been booked yet, which honestly being the first property booked, isn’t a good thing.

Sarah Karakaian: That means that that host wasn’t optimizing outside of their booking window and they got booked when there’s more money to have been earned

Annette Grant: I see this I hear this all the time from hosts that have like big events in their town like the person just stayed they booked it again for next year and at the same exact rate And I’m like, no they like brag like oh, I’m already booked this time for next year And I’m like that means you left so [00:08:30] much money on the table.

Sarah Karakaian: Not only that We had a host who found she lives in Indianapolis She found out Taylor Swift book, or was going to come to town and do her eras tour and she quickly Opened up her calendar to get booked and it’s like you do not want to be the first one to the market

Annette Grant: And let the market kind of you want to see algorithms to see what can what is the demand and how can the rates actually be pushed right?

Sarah Karakaian: What is human buying behavior gonna? How can we maximize it? Right? That’s the fun [00:09:00] That’s the game part. I think

Annette Grant: absolutely.

Pricing Strategies Based on Booking Window

Sarah Karakaian: So let’s talk about if you’re inside your booking window What you should do and what you should do might surprise you the advice we’re going to give so hang tight if you’re inside your booking window and you’re not booked and you’re not booked.

Annette Grant: Okay, okay. So you have no reservations and you’re inside that 14 days. Well, it would be our 14 days. Right.

Sarah Karakaian: Right. All right. So we’re inside of our booking window. For example, well, you said 14 days. That’s the market. But ours is nine days. Okay, we’re inside of our nine day [00:09:30] booking window and we’re not booked.

Sarah Karakaian: But demand is telling us. That people are booking what the first thing you want to do is make sure your pricing is in line with the market. That is not saying to lower your rate.

Annette Grant: Say that again. Say that again for the people in the back.

Sarah Karakaian: That is not saying because why? because There is demand. So something else is wrong is if your pricing’s in line. Okay. So let’s say you, you raised it because you were outside your booking [00:10:00] window. You weren’t booked. You’re testing the market. Okay. They didn’t bite. All right. Interesting. But I don’t know. My neighbor is getting $200 bucks a night. Uh, my other neighbor is getting $215. Someone else is getting maybe $197.

Sarah Karakaian: Okay. And I’m not booked and I’m at $198. I’m actually not going to touch my rate because that means demand is there. My, my competitors who have the same stuff as I do, they’re getting booked at these rates. Something else is amiss. So something that we’ll do, Annette,

Annette Grant: yeah, what are some levers we can pull?

Sarah Karakaian: [00:10:30] We might run a promo directly via Airbnb. It’s a very powerful marketing tool, Airbnb is. And when you run a promo via their promo, uh, feature. They will often resurface you in the algorithm. They might even market you out to potential bookers in the area via email. So that’s a really good, and you don’t have to discount it to promo it.

Sarah Karakaian: And honestly, those promos often take the average of what you usually make during that time. They’re just, [00:11:00] if you run the promo, you’re telling Airbnb, Hey, like try this property out. It should do really well if people could just see it. And then on top of that, you also make sure that you are optimizing your listing.

Sarah Karakaian: That could be tweaking the title and saying, Hey, we still have availability for, you know, it’s over now, but the Taylor Swift Eras tour or. The golf event, you know, whatever it is.

Sarah Karakaian: You can put that in your title, like, Availability for, and that way people are going to see it. Like, they don’t even have to [00:11:30] look at the calendar.

Sarah Karakaian: They know you’re still open for those dates.

Annette Grant: You’re taking some of that work off their plate.

Sarah Karakaian: What else do people see when they get on to an OTA? They see that first photo. Maybe I was asleep at the wheel and I didn’t change it. It’s still like a picture of the fire pit and the beautiful snowy view.

Annette Grant: And it’s warm outside.

Sarah Karakaian: Cool. People are coming for this golf event. Like, let me show them how they can, like, after the golf event’s over, come back and hang out in this big kitchen or in this beautiful back patio. Right? Like, what is that [00:12:00] photo? And how can we potentially, I guess what I’m saying here is your marketing efforts might be off.

Sarah Karakaian: If your pricing is correct and there is demand. Don’t lower your rate and, and lose money. See why people aren’t clicking to book your property.

Annette Grant: So just to reiterate, this isn’t just about knowing what your booking window is. It’s knowing what to do with it. So price labs can surface this data for you.

Annette Grant: Airbnb can give you this data, but you are the one that has to act on it. You’re the one that has to, this is where the art [00:12:30] and the science comes in. Okay. You’ve got to put in the

Annette Grant: work.

Sarah Karakaian: I see it happening two different ways. Either we have hosts who feel. Intimidated by, okay, Sarah and Annette, tell me that I have to know my booking window.

Annette Grant: Or empowered, and we want you to be empowered by knowing it.

Sarah Karakaian: Right, but I want to talk about reality of like, hosts either feel overwhelmed by this and say they know they have to know it, like, well, I’m sure it’s in Pricelab somewhere and even if I found it, I really wouldn’t know what to do with it, right?

Sarah Karakaian: Or, they know that they can, they are [00:13:00] empowered because they have Pricelab, so they know how to navigate it, and so they, But then they, it’s that last sentence that you said, both instances, no one’s acting on it and, and pulling levers and like having a sense of pride. And also knowing that some of this is testing.

Annette Grant: Yes. Always, always be testing.

Sarah Karakaian: Always ABT.

Green, Yellow, Red: Pricing Traffic Lights

Annette Grant: Now let’s talk about how your booking window dictates your pricing decisions. Here’s a simple system, we’re going to think about it like traffic lights.

Annette Grant: So we’re going to go green, yellow, red. So green [00:13:30] light, what’s it mean? It means go. So if you’re outside of your booking window, go raise your prices

Sarah Karakaian: and demand strong.

Annette Grant: Yeah. Yeah. Outside of your booking window, demand is strong. Raise your rates. That is a green,

Annette Grant: green up prices. Yeah. Yeah. Yeah. Yeah.

Annette Grant: Money, money, money.

Annette Grant: Yeah. Yellow light. What’s yellow mean?

Sarah Karakaian: Caution.

Annette Grant: Okay. We are approaching our booking window. But we want to hold steady here, okay? We don’t want to crumble. We might want to just adjust our prices [00:14:00] ever so slightly.

Sarah Karakaian: Or hold steady. Or just hold steady, yeah.

Annette Grant: This is where you just kind of want to, it’s caution.

Sarah Karakaian: And you might want to check in with your pricing and the market a little bit more often during this time. Because, you know, you don’t have, we always preach, you don’t have to be in your dynamic pricing software every day. Oh, right. Let, let it do its job. But, If we’re, if we’re approaching the window,

Annette Grant: you want to check it out.

Annette Grant: You want to check in, make sure everything’s still stable. See what you need to do. Red light. All right. You’re stopped. You are in your booking window [00:14:30] and you are still unbooked

Sarah Karakaian: and demand is there. Uh-oh.

Sarah Karakaian: what does red light mean? It does not mean panic. It just means to stop and think, and then take action. Okay. So we might want to run promos and yes, we’re going to tout running a promo on Airbnb, but also you have an email list or a text list. You can reach out to previous guests. We also want to make changes to our listing, maybe adjust the photos or the titles, talk [00:15:00] to the potential booker and tell them, come book me.

Sarah Karakaian: And then last. Make data driven decisions as it relates to your pricing, maybe reduce the pricing, but only if the data suggests that you should. Okay.

Conclusion and Special Offer

Sarah Karakaian: So here’s the thing, knowing your booking window and using this green, yellow, red strategy will help you make more informed decisions and reduce or completely eliminate any sort of pricing panic.

Annette Grant: So we hope today you’ve [00:15:30] learned that this booking window, it is your guide. It is your guide to making more profitable pricing decisions. It is necessary that you know it, you know where to find it. Now, don’t just know it, use it to your advantage.

Annette Grant: We would love for you to check out the dynamic pricing software we use Price Labs. We have a special offer for you free. 30 day trial. And if you can get in there and maximize your revenue within your 30 days, it’s like free money, honestly.

Annette Grant: So click the link in our [00:16:00] show notes or tell them TFV sent you. And with that, I am Sarah Karakaian.

Annette Grant: I’m Annette Grant and together we are Thanks for visiting.

Annette Grant: Talk to you next time. [00:16:30]