If you’re a seasoned host or ready to dip your toes into the vacation rental market, you’ll know that finding the right price for your property is a critical decision. In the realm of Airbnb, the word “Base Price” is more than just a number; it’s the cornerstone of your rental strategy. As an example, a base price to Airbnb hosts is the equivalent of a cost price for a shop selling an item, like a vehicle.
In this article, we’ll explore what the Base Price is, why it’s crucial, and how it can significantly impact your success as an Airbnb host. So, grab your coffee, get comfortable, and let’s embark on a journey to uncover the secrets behind this vital metric.
We spend a lot of time advising hosts on how to run the best, most profitable Airbnb listing, but we realized the other day that we’ve never really gone into any great detail about Base Price. We know we’ve mentioned Base Price as ‘the foundation of dynamic pricing’ but we’re willing to bet that you don’t fully understand what that means!
What is a ‘Base Price’?
Everything needs a base. Having a base allows you to build on something solid. Without it, you’ll have too many moving pieces and not enough stability. This is why this figure is so important. In the simplest terms, this number is the base price that you think your listing is worth.
Your basic price does not mean that your prices will always be that exact figure. Rather, the Base Price acts as a median figure. This means that the price values go higher and lower and end up with the stipulated Base Price as a median.
How Do I Determine It?
If like many Airbnb hosts looking to boost their monthly earnings, you make use of a dynamic pricing engine like DPGO, these systems offer suggestions for your Base Price.
DPGO uses local market data, including booking surges, historical patterns, and competitor analysis to determine the best price for your short-term rental property. Your chosen figure is critical to dynamic cost accuracy and optimized revenue management, which are both so important when running a vacation rental business.
In a recent update, we broadened our offerings to include various selection options. DPGO users can now choose from five options: aggressive, conservative, balanced, custom, and fixed. Having a fixed Base Price is not advised as it means your price structure may become slightly stagnant and might interrupt the use of a dynamic cost system.
How Should I Use It?
Without the use of a dynamic pricing engine, Base Price is more useful as a guide to how much you can vary your price. As we stated above, this price is the starting figure on which you base all of your price fluctuations. Without it, you can’t alter your daily rates efficiently.
You need a basic price to help you keep track of your median price for any given period, whether it be by month or by season. If you picture a graph with the highs and lows of your various prices, your Base Price needs to be like a line through the middle. It’s the value you should always average out to.
Think of your Base Price as a middle line. If during the summer season, you charge 1.5 times your normal prices, understand that in winter, you may have to charge 1.5 less than your normal prices. This will only be true if your chosen foundation price is a true representation of your market’s average price.
Remember to include the costs of secondary services like insurance and maintenance. Insurance should be the most critical point on an Airbnb host’s list of ‘Must Have’ features. Be sure to get the best insurance policy possible from the best insurance provider.
Should I Ever Adjust My Chosen Value?
Smart engines like DPGO recommend a Base Price for your listing based on competitors, average market charges, and amenities. However, what we can’t analyze are the things we can’t see, like the floor your listing is on in an apartment block, the views that your property boasts, or the price of your furniture and finishings. This is exactly why you should review the recommended Base Price and compare it to that of your competitors in order to ascertain if it is too high or too low.
Remember, if you opt for a static base price, you’ll need to keep this in mind if something happens that makes the market change drastically, like another lockdown or a change in local vacation rental guidelines or laws. Hosts who choose the dynamic option won’t have to manage this process, as the engine will automatically alter the Base Price according to the market health, booking pace, surges in bookings, and associated market fluctuations.
How Can DPGO Help?
Smart pricing is a huge help when you want to run an optimized short-term rental business and DPGO is a great choice. Our DPGO engine is the most advanced on the market, plus our price breakdown is more affordable too!
We analyze everything from currency exchange rates and occupancy to global market health and weather when crafting our price recommendations. The DPGO pricing engine also offers our users the ability to optimize other aspects of their listing and revenue management. Start your free 30-day trial now!
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