It feels pretty good to watch your Airbnb calendar fill up: you have a beautiful place and everyone wants it. The faster you book up, the better you feel. But back-to-back reservations for months on end probably means you’re leaving a lot of money on the table.
Think about it this way: an Airbnb listing priced at $1 per night will get 100% occupancy, guaranteed. But more bookings doesn’t mean more money. A host could earn more by renting out her place at $200 per night for 25 nights a month than she could being completely full at $150/night.
So how do you know if your place is underpriced?
A great way to judge if your place is underpriced is to pay attention to when your neighbors are booking. If you were booked up for Outside Lands in San Francisco six months ahead of time, it probably means that you had one of the best deals on Airbnb. Your neighbors who set a higher price for their place didn’t book as quickly, but made more money as demand for those dates increased and the number of available listings on Airbnb went down.
This basic lesson in supply and demand informs what is known as the "booking curve." The booking curve tells you the pace at which you should be booking, based on predicted demand. If you book up too fast, you’re probably priced too low. If you haven’t booked fast enough, you’re priced too high. For example, we know that about half of reservations on Airbnb happen within 30 days of arrival, so if your calendar is completely full one month out, you could raise your price to keep up with how much demand there is for your apartment.
A good rule of thumb for urban markets is to aim to be about 50% booked one month out, 30% booked two months out, and 10% booked 3 months out and more. These are flexible numbers and vary by city and neighborhood, but they represent when guests are booking. Most hosts don’t realize how late guests on Airbnb book and worry unnecessarily (and at great cost) about unbooked days less than a month away.
The best way to measure success for your Airbnb business is not by dates marked off on the calendar, but how much money is in the bank.
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